5.2 Future changes to legislative access to cash criteria

5.2 Future changes to the legislative access to cash criteria

As part of the RBR, the Minister for Finance published a number of recommendations in relation to access to cash. One recommendation was for the Department of Finance to develop Access to Cash legislation and to prepare a related Heads of Bill in 2023, the first step is legislating for this area. The RBR also called on Department officials to prepare Heads of Bill in 2023 to require ATM operators to be authorised and supervised by the Central Bank while also providing the Central Bank with responsibility and powers to protect the resilience of the cash system, including the authorisation and supervision of CIT firms in respect of their cash handling activities and related financial services.

Furthermore, the European Commission’s legal tender proposal[1] which was published in June 2023 recognises that the acceptance of cash will also be undermined if there is insufficient access to cash. Accordingly, it aims to ensure everyone within the euro area has sufficient access to cash by requiring each Member State to annually monitor access and acceptance of cash within their jurisdiction. This will be undertaken on the basis of common indicators to be formulated in a separate European Commission implementation regulation.

As already noted in this Consultation Paper, the trend between electronic and cash payments over the last ten years suggests that cash usage is likely to further reduce as in many other EU countries. While the legal tender regulation will reduce the likelihood of that happening, cash still retains an important function as a fallback option to digital payments. In recent years, there have been a number of cases when there have been disruptions with digital payments systems with a consequent rise in cash transactions by consumers as an alternative.

The 2022 ECB SPACE data, noted that 90% of Irish people found is very easy or fairly easy to access cash facilities in line with the euro area average of 89%.

Figure 14: Ease of access to cash withdrawals in Ireland

Source: ECB SPACE survey

It is important that as cash usage declines, appropriate consideration is given to ensure that access to cash is maintained at an appropriate level, which may change based on the preferences of consumers over time. This minimum appropriate level requires certain cash infrastructure (e.g. cash access points and lodgement access points) and a resilient cash cycle/process to move cash though the system from when it is lodged to where it is withdrawn, whilst ensuring the high levels of security necessary throughout.

The upcoming access to cash legislation will set out criteria based on June 2023 cash usage using both population and capacity. However, as cash usage changes, the NPS will need to consider if changes should be made to the criteria and, if so, what is the nature of these changes. For example, what impact a decline of 50% in cash usage would have on cash access points and lodgement points, and would the understanding of reasonable access alter in this context. In parallel to cash usage, the sustainability of the cash cycle needs to be considered for both resilient, technologically, and in terms of costs as well as the impact on social/financial exclusion.

As the cash cycle changes over time where and the application of the Access to Cash criteria may result in local deficiencies being identified, even though the population and capacity criteria are met, localised difficulties with access to cash infrastructure arise. Reasons for these deficiencies may vary, and can reflect, for example, difficult access to cash infrastructure because of a river, lake, motorway, or railway line that means increased travel times for people to access cash points. A deficiency could also arise from large scale increases in population due to several large housing schemes coming on stream within a short period. How potential local deficiencies are managed, assessed and balanced against changing cash usage is an important consideration of future reasonable access to cash.

In the course of the NPS, the Department of Finance will examine what are the appropriate levels of access to cash considering how any further evolution of the cash infrastructure will be managed in a fair, orderly, transparent and equitable manner for all stakeholders. The assessment will consider developments in other economies. The Dutch Central Bank in 2022 agreed a cash covenant[2] with participants in the cash cycle to boost resilience. In the UK, the Bank of England is also reviewing the cash cycle to ensure it is fit for purpose[3]. Sweden’s Riksbank in 2021 placed an obligation on certain cash cycle participants to maintain cash services[4]. All of these efforts are to ensure cash is available as cash infrastructure shrinks to fit as cash usage reduces over time.