Safeguarding Cash: ICA Recommendations to Central Banks

The International Currency Association (ICA), representing the global currency sector, has published a Cash Policy White Paper, available on its website www.currencyassociation.org, which is summarised here. It wants policy makers to recognise that the benefits of cash to society may be lost without practical steps to protect the supply and acceptance of cash in society and promote its further development.

To achieve this, it has eight concrete recommendations:

• Ensure that retailers accept cash

The ICA wants the right of choice to be guaranteed by clearly mandating the obligatory acceptance of cash and stating that cash is legal tender. The ICA sees the continued use of cash as essential for protecting individual privacy. It is concerned that allowing card-only payment is potentially discriminatory to sections of the population that are not able to access e-payment cards.

It would like retailers to visibly promote that they accept cash, for example through ‘cash accepted’ or ‘cash is welcome’ signs and promote the advantages of using cash in-store.

It would like the development of new opportunities to combine cash payments with digital withdrawals or digital services, for example services where consumers’ smartphones guide them to the nearest cash withdrawal facility, whether an ATM or a retailer offering a cashback/cash-in-shop service.

• Ensure that everyone can access cash easily

Regardless of geography, citizens need to have access to cash within a reasonable period of time and distance whether from an ATM network, including mobile ATMs, or withdrawing cash in shops through cashback and cash-in-shops.

Sweden has introduced the obligation for large credit institutions to provide cash services throughout the country, with the aim of ensuring a minimum level of access to cash services for consumers and companies alike. There are many innovative projects in the field such as direct cash delivery or monitoring tools that provide information about the nearest point of access to cash.

The ICA calls for withdrawing cash to be available at no charge for those that hold a bank account. If they have not already done so, governments should consider introducing a cap on such charge.

• Provide easy to use cash deposit touchpoints

An effective cash cycle requires easy access for depositing cash and for cash acceptance to be commercially attractive to merchants. Governments can help ensure there is an appropriate network of cash deposit taking facilities by, for example, mandating that new ATM machines and replacement ATMs are deposit-taking and requiring that there is a recycling ATM within a specified distance – for example 1 km – of any bank branch before it closes.

• Give consumers transparency on costs of all forms of payment

The ICA would like consumers to know the cost of individual payment, including the cost of the entire service to the consumer, ie. including annual fees, user data associated with many forms of payment and the hidden cost of fraud for credit cards.

• Promote a sustainable cash cycle

The cash industry is making huge strides towards a ‘net-zero’ cash cycle, with more durable banknotes, high levels of end-use recycling and innovations to reduce the transport of cash, such as retail level cash sorting and recycling systems.

Central Banks and governments should introduce regulatory or legislative changes to enable the introduction of innovative and more sustainable cash access, recycling and deposit models.

• Embrace diversity in the development of payments landscapes

Within a country, different parts of the populations may have different payment habits. The ICA is cautious when it is assumed that one type of payment tool is ‘better’ or ‘good’. There will be different models for the local payment landscape across the globe.

• Remove restrictions on high-denomination banknotes and caps on the use of cash

Higher denominations banknotes allow people to use cash as a store-of-value, and to choose to make legitimate high value purchases in cash. There is no evidence that payment limits reduce crime or that undesirable activity would be reduced by restricting cash. It appears that criminals are comfortable using digital money and, of course, crypto-currency use is unconstrained.

The ICA encourages policymakers not to have payment limits and, instead, to equip law enforcement authorities with tools to track financial crime in crypto – ‘currency’ contexts as well as better documenting sensitive financial transactions.

• Educate the next generation, redesign cash and communicate about its value

The recent examples of the popularity of ‘cash stuffing’ on social media TikTok with ‘GenZ’ (those born between 1997 to 2012) show that today’s young people also turn to cash to understand budgeting and the value of objects and services that they can purchase.

Cash is a pillar of stability and helps to create identity and economic stability. Cash is far more than a means of payment – it bonds society together and supports the identity of nations.