DNB Commissions Study into Future Cash Infrastructure

The Dutch National Bank (DNB) has commissioned a medium-term study to consider the cash infrastructure needed by the Netherlands. In October 2020 the DNB estimates that cash use at the point-of-sale had fallen to 20%.

This is a dramatic fall from its 2019 estimate of 32% and clearly the COVID-19 pandemic has driven this. The DNB is clear that it is important that cash is still accepted, and the cash can be accessed. But it is equally clear that the necessary infrastructure is under pressure given these volumes and circumstances.

A DNB ‘Occasional Studies’ paper (18-2) written by Jurgen Spaanderman has been published which gives the background and the purpose of the study. It establishes why the DNB regards cash as necessary and then describes why it is needed.

Jurgen’s introduction makes the point that ‘cash is the only way for people to carry money without being dependent on a bank’, and ‘without cash, citizens can no longer claim their credit balance from a bank.’ Important attributes that allow people to have confidence in commercial bank money.

Cash is, of course, legal tender, accepted by all (inclusive), good for budgeting and usable independent of an electronic or digital infrastructure. The DNB, along with the ECB and other banks in the Eurosystem, is assessing the possibility of a future ‘digital euro’ but this is not an option currently.

The DNB is responsible for the smooth operation of the payment system, including cash. Given that cash is regarded as a requirement, the DNB must keep cash efficient and cost effective. With today’s low level of cash usage at the POS, this is no longer self-evident. The cash infrastructure is at risk of being so eroded that the ability to access, use and deposit will not be reliable.

This study was recommended by the National Forum on the Payment System in its report earlier this year. It will cover the whole cash cycle including the cost of payments. It will be carried out by an external third party, with the conclusions made available summer 2021.