The future of cash in New Zealand

The Reserve Bank have released a discussion paper about ‘the future of cash’ in New Zealand


They say:

The purpose of this issues paper is to review whether cash has a unique role in New Zealand and identify some of the implications of moving towards a society with less cash.
Section 2 considers the role of cash in New Zealand, outlining the key features of cash and how it is used in society.
Section 3 explains why although the Reserve Bank is required to supply whatever cash is necessary to meet the demand of the public, the role of retailers and banks in the cash supply chain can affect the availability of cash.
Section 4 illustrates the trends in cash in circulation (CIC) domestically and abroad and section 5 considers what uses of cash are also met by electronic substitutes.
Finally, section 6 considers what roles of cash do not have substitutes and the broader issues of moving towards less cash.
Section 7 summarises the issues regarding the future of cash and seeks your views on those issues.

Consultation documents are available to read at the following links:

Full Discussion Report


Submissions to the Reserve Bank close:


You can provide feedback via the options below – be sure to include your name and contact details with your feedback:

Online: By filling in the electronic form (and uploading your submission in word or pdf)

The Future of Cash – Te Moni Anamata
Economics, Financial Market, Banking Department
Reserve Bank of New Zealand
PO Box 2498
Wellington 6140

We encourage all members to make a submission and give their views to the government on this.

• Hospitality NZ is also interested in your views on this – we would welcome your feedback to help shape our submission too – please email our Advocacy and Policy Manager, Nadine Mehlhopt by Tuesday 6 August 2019.


Overview from the consultation document:

New Zealanders are using cash less and less for transactions. Although cash in circulation (CIC) is increasing, this is attributed to non-transactional uses of cash, including recent increased offshore exports, increased holdings of cash, and potentially activities in the shadow economy. The cash system is a network that has increasing benefits as more people use it. The opposite is also true. As the transactional demand for cash falls, the per-transaction cost of providing cash infrastructure increases.

Commercial operators will be incentivised to reduce their costs and might reduce cash infrastructure, charge fees for cash payments, or stop accepting and issuing cash. These commercial decisions could in turn reduce the network effects of cash. As fewer consumers, businesses and banks deal with cash, the benefits of using cash will decline. Cash held as a store of value might lose its liquidity as it becomes harder for depositors to find banks or retailers that will accept cash deposits and payments.

A ‘network externality’ could arise if cash supply decisions do not take into account the social impacts of reducing cash. This externality takes the form of people whose lives are negatively affected. This paper finds several key issues to consider if New Zealand has less cash:

  1. People who are financially or digitally excluded could be severely negatively affected by a decline in cash.
  2. Tourists, people in some Pacific islands and people who use cash for cultural customs could be negatively affected if they cannot use cash substitutes.
  3. All members of society would lose the freedom and autonomy that cash provides and the ability to use cash as a back-up form of payment, and might be more exposed to national and personal cyber threats.
  4. There would be limited or balanced effects on people's ability to budget, New Zealand's financial stability and government revenue.
  5. Cash infrastructure is costly. Moving to a society with less cash could increase efficiency and reduce the overall transaction costs of payments.

We seek your views on the size, likelihood and impacts of the issues presented in this paper. We also invite your views on whether there is a role for the government to act in either preserving the cash system for future years or meeting the needs of cash users in other ways, and the Reserve Bank’s role in any of this.