Reserve Bank developing strategy to secure the future use of cash

Reserve Bank assistant governor Christian Hawkesby said demand for cash had increased significantly in the early stages of the pandemic. Photo / 123RF

By RNZ

The Reserve Bank is giving immediate priority to ensuring a future for cash.

In a speech this afternoon, Reserve Bank assistant governor Christian Hawkesby said access to cash was declining and being used less as a means of payment.

"However, cash provides important benefits to many people, including legal tender money, social and financial inclusion, peer-to-peer payments, backup payments, and privacy and autonomy," Hawkesby said.

For example, he said demand for cash had increased significantly in the early stages of the pandemic, with $800 million in notes issued in March, compared with $150m the year earlier.

"Since then, cash in circulation has continued to increase, growing by about 15 percent year on year during the second quarter of 2020."

Hawkesby said other countries had also experienced increased demand for bank notes during the pandemic.

He said the Reserve Bank was developing a strategy to encourage banks and other industries to continue to support cash, and was also working on a plan to address a wider question about the future of money itself.

"Looking forward, we remain open minded about how the technology of money and payments will continue to evolve."

RBNZ was open-minded about how technology was changing money and payments, he said.

It was also conducting research on retail central bank digital currencies (CBDC).

"Although we have no imminent plans to issue a CBDC, we are well-connected and considering these developments very closely."

The central bank had been conducting research about the future of cash for some time, and the latest initiative follows last year's extensive public consultation.