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Future of money – cash system redesign - Te moni anamata – pūnaha - Reserve Bank of New Zealand - Te Pūtea Matua

We are seeking your feedback on issues facing the cash system and policy options raised which are intended to achieve greater efficiency and resilience. You can give your feedback online for this issues paper by 10am, Monday, 7 March 2022.

Read the Future of Money – Cash System Redesign issues paper (PDF 2.2MB)

Read more about the Future of Money – Summary of responses to our 2021 issues papers (PDF 1.3MB)

Read the public responses to our 2021 issues papers

A Quick Guide (PDF 950KB) to the issues paper is also available

Please use our online response tool if you can, or email us at [email protected], or reach us using one of the other ways set out in the “Have your say” section of the issues paper. You can also download a copy of the feedback form to consider before completing it online.

Go to the online response tool


Part A (Sections A.1 to A.3) introduces the New Zealand cash system, outlines our proposed objectives for the cash system, and provides a high-level overview of the external factors impacting on the system.
  • The cash system
  • Objectives for the cash system
  • External factors impacting on the cash system
Part B (Sections B.1 to B.2) looks at the cash system in more detail. We examine trends in the use of cash in transactions, and explore financial and social inclusion outcomes, system costs, and value anchor outcomes. We conclude that the issues facing the cash system are significant, the cash system is unlikely to be fit-for-purpose in the absence of a policy response, and that a policy response is urgently required.
  • The current state
  • The no-policy-response counterfactual
Part C (Sections C.1 to C.8) explores possible policy options, including a bundle of options that together we believe would be effective in creating a fit-for-purpose cash system. We seek feedback on all the policy options identified, as well as any that are not on the list but you believe ought to be. We are interested in your views of the bundle of policies identified, or any other bundle of options. We also ask who should pay the costs incurred in the cash system.
  • Potential policy responses
  • Addressing resilience and efficiency
  • Addressing cash acceptance
  • Addressing cash access
  • Addressing consumer demand for cash
  • Responding to trade-offs between objectives
  • Who should pay?
  • Have your say
The Appendices provide background material.


Executive Summary

The Reserve Bank of New Zealand – Te Pūtea Matua has monitored and reported on developments affecting New Zealand’s monetary system for some time. In 2017 we began investigating cash use and the systems that make cash available. This led to a public consultation on cash-related issues in 2019. In 2020 the Reserve Bank created a new department – the Money and Cash Department – Tari Moni Whai Take – to better deliver on its responsibilities with respect to the smooth functioning of the monetary system.

In September 2021 the Reserve Bank initiated a comprehensive public consultation – ‘The Future of Money – Te Moni Anamata’ – building on the earlier cash-focused work programme. This consultation paper is the third paper to be released as part of the recent initiative and should be read in conjunction with the two earlier papers (“The Future of Money – Stewardship”, and “The Future of Money – Central Bank Digital Currency”). In particular, important terms used in this paper – ‘central bank money’, ‘private money’ and ‘value anchor’ – receive a fulsome explanation in earlier papers.

In “The Future of Money – Stewardship” the Reserve Bank articulated its role in relation to money and cash as one of stewardship, and proposed stewardship objectives. Issues related to central bank digital currency were explored in “The Future of Money - Central Bank Digital Currency”. The purpose of this paper is to introduce the cash system, outline our objectives for it, explain the external drivers impacting on it, assess whether the system is likely to meet our objectives, and seek feedback on possible policy options for redesigning the cash system.

This paper, and the previous two, are premised on the importance of central bank money. The stewardship paper outlined the two important roles performed by central bank money, namely acting as a value anchor for the financial system, and contributing to financial and social inclusion. Cash is currently the only generally-available form of central bank money and thus is relied upon to perform these roles.

Cash can only meet the stewardship objectives for central bank money if the cash system is fit-for-purpose. We define a fit-for-purpose cash system as having the following attributes:

  • The physical capacity and ownership structure of the cash system is appropriate for delivering resilience.
  • There is ongoing cash acceptance and availability, until such time as cash is not needed.
  • Subject to the above objectives being met, the cash system is an efficient user of resources.

These attributes constitute our proposed objectives for the cash system.

The cash system is being affected by a number of significant external drivers. While there are both challenging and beneficial external drivers, on balance we view these as creating significant issues for the cash system. Our view is that, in the absence of a policy response, the cash system will face acute resilience issues, the contribution cash makes to financial and social inclusion will continue to decline, and the ability of cash to perform its role as a trusted value anchor for private money and the wider financial system will be under threat. In other words, the cash system will be unable to meet our objectives.

We outline 16 potential policy responses that in our view can help deliver a fit-for-purpose cash system. No single policy appears able to deliver on its own, and it is plausible that different combinations of policies could be effective. To illustrate why multiple policies seem appropriate, we identify eight policies that we view as forming a coherent ‘bundle’, able to shape incentives and address our objectives appropriately.

This bundle is only a ‘starter-for-ten’. It is there to indicate where our thinking has landed thus far and is included in order to facilitate engagement and encourage feedback. We are not fixed on this bundle as the direction for policy. We seek feedback on all options, not just our starter-for-ten bundle.

There are complex trade-offs to be made between and within our proposed cash-system objectives. We believe the severity of these trade-offs can be reduced through a careful bundling of policy responses.

One trade-off that cannot be designed away is that between efficiency and resilience. In order to be resilient the cash system needs to have capacity that exceeds its business-as-usual demand levels. However, excess capacity is expensive to carry and is under-utilised during business-as-usual periods. The cost of carrying the excess capacity may be significant. A risk-appetite framework will need to be applied in deciding how much excess capacity to build into the system.

Finally we ask who should pay for the costs of the cash system: bank customers when they access their account to acquire cash; banks that provide accounts; tax-payers on the basis the cash system produces attributes that have the characteristics of a public good; merchants who accept cash; or providers of payment options that compete with cash?

Underlying the question who should pay, is the question of who is paying now. Some of the policies raised for further consideration suggest a rebalancing of costs towards banks. In some ways, the question of what role banks play in the cash system – historically, now, and in the future – goes to the very essence of what it means to be a bank. Banks may prefer a digital-dominant (or digital-only) relationship with customers, but that has consequences for cash availability, which in turn affects the value anchor, which, in turn, we argue underpins private money. This is as much a social licence argument about banks’ relationships with their customers as it is an economic argument.

Similarly, we pose the idea that the government should bear more of the costs of the cash system – by way of mandating merchant cash acceptance (including requiring government agencies to accept cash when they interact with the public) and potentially by way of involvement in some form of utility entity.

Again, this is an ‘issues paper’ in that it raises options for further consideration, rather than making specific, concrete proposals. We hope it provokes engagement and suggestions on how to achieve a fit-for-purpose cash system.

The potential policies that have been identified, and our starter-for-ten bundle, are presented in the summary table below.

Summary table [Abridged]: Potential policies and the starter-for-ten policy bundle

Theme Potential policies Starter-for-ten policy bundle
Resilience- and efficiency-themed
1. Achieve consolidation within the cash system via the creation of utility entities.

2. Broaden access to wholesale cash.
  3. Accelerate setting of cash machine standards.
  4. Find efficiencies related to coins.

  5. Outsource core functions performed in the wholesale cash sector to an offshore supplier.

Cash acceptance- themed
6. Mandate acceptance of cash by merchants and government entities (requires decisions about scope, thresholds).

  7. Instigate the remuneration of merchants (or other retail cash sector cash service providers) by banks when a cash-out service is performed.

  8. The Reserve Bank remunerates merchants for cash quality checking
Cash access-themed
9. License ATM providers
  10. An agency representing taxpayers contracts merchants (or other providers) to provide cash services.
  11. Use moral suasion to impact on banks' cost recovery strategies
  12. Prescribe minimum standards for suite of services provided by banks.
  13. Create new tools that allow the Reserve Bank to direct banks to provide cash services, and at low cost to customers

Consumer demand-themed

14. Campaign to increase public awareness of cash issues.

  15. Financial incentives to use cash (e.g. a discount).
  16. Limit use of consumer rewards by payment card issuers.