Central Banks and Cash Round-Up
The focus of this month’s coverage of cash information in central bank annual reports is Asia, looking specifically at Kazakhstan, Kyrgyzstan, Japan and New Zealand.
National Bank of Kazakhstan (NBK)
Cash in circulation: during 2022, the amount of cash in circulation expanded by 10.8%. One of the reasons cited for the growth was the overall upturn in the country’s economy. Moreover, during the state of emergency in the country, the NBK met ongoing demand for cash from the economy and provided support to banks amounting to 323.9 billion tenge. During that period, just over 10,900 ATMS (86.1% of their total number across the country), were replenished with cash.
Banknotes accounted for the most significant portion of cash in circulation – 3.7 trillion tenge at the end of 2022, compared with 91.2 billion tenge for circulating coins.
Banknotes and coins: in October 2022, NBK issued a new high denomination 20,000 tenge banknote (previous notes of this denomination were commemorative only). During the year, just under 5.32 million collectible coins were minted and issued.
Counterfeiting: NBK detected 386 counterfeit banknotes and five counterfeit coins. The quantity of counterfeit notes detected in 2022 decreased by 24.7% compared to 2021.
Cash management: NBK is constructing new cash centres in the cities of Astana and Aktobe. In the future, cash supply to the regions of Kazakhstan will be carried out from three regional cash centres – the two new ones as well as one in Almaty.
National Bank of the Kyrgyz Republic (NBKR)
Cash is still the main instrument for retail payments amid an increase in the share of non-cash payments and the development of the national payment system.
Cash in circulation: in 2022, this increased by 42.1%, amounting to KGS 198.8 billion. Cash turnover was represented by 463.8 million banknotes and 545.3 million coins. The share of banknotes accounted for 99.1%, and the share of coins 0.9% of the total value of cash in circulation in 2022. Commercial banks (84.4%), institutional investors (8.3%), resident legal entities and individuals (7.3%) were the primary holders of notes at the end of the reporting period.
Counterfeiting: the number of detected counterfeit banknotes was 31 (compared to 76 in 2021), representing a ratio of 0.1 ppm.
Payments: in 2022, work continued to ensure the efficiency, security and reliability of the country’s payment systems. Measures were taken to expand the population’s access to banking and payment services and the country’s remote regions. Commercial banks imported 276 ATMs, 3,420 POS terminals and 359 payment terminals. By the end of 2022, the number of banking equipment amounted to 2,041 ATMs, 16,252 POS terminals and 2,356 payment terminals.
Bank of Japan (BOJ)
The BOJ will introduce a new series of banknotes in July 2024, with new 1,000, 5,000 and 10,000 yen notes entering circulation.. The new issue adds portraits to both the front and reverse of the notes. The 1,000 yen note will commemorate medical researcher Shibasaburō Kitasato; the 5,000 yen features educator Umeko Tsuda; and the 10,000 yen 19th century industrialist Eiichi Shibusawa.
Cash in circulation: the amount outstanding of banknotes issued increased by 2,084.2 billion yen from the previous fiscal year-end to 121,955 billion yen.
Coin circulation, however, dropped sharply. The number of Japanese coins in circulation fell 5.5% from its peak in 2021, declining for six consecutive quarters to Q2 2023. The sharpest drop has been in the circulation of the largest denomination ¥500 coin.
In spite of this, the BOJ will also issue a new 500 yen coin in 2024 (along with new banknotes). This is possibly because it is the most common coin given to children to keep in their piggy banks, a tradition that seeks to establish solid patterns of saving and deferred gratification at an early age.
Reserve Bank of New Zealand (RBNZ)
Cash in circulation: banknotes and coins in circulation went down by $0.06 billion (to $8.92 billion) in the year to 30 June 2023. The decline is attributed to several factors, including changing payment and shopping preferences and reduced access to bank branches for cash services for individual and retail customers.
Counterfeiting: the average ratio of detected counterfeits in circulation was 9.22 ppm, which was within RBNZ’s pre- defined tolerances but significantly higher than seen in recent years (in 2021/22, the figure was 3.64 ppm). RBNZ has stepped up its engagement with large retailers, the cash industry, and the public to support the identification and handling of fake banknotes.
Resilience: the report calls for resilience in cash, as Cyclone Gabrielle caused extensive damage to payments-enabling infrastructure in some areas of New Zealand. Electronic payment systems such as EFTPOS were unavailable for several days.
This disruption highlighted the cash system’s lack of resilience and vulnerability to power, data, and road network outages, exacerbated by banks reducing branch and ATM networks and retreating from offering in-branch cash services for retailers. RBNZ supported the cash industry response to Cyclone Gabrielle by coordinating industry, central government and local responses to facilitate cash availability in areas affected by the cyclone.
The increased likelihood of extreme weather events resulting from climate change means that the lack of resilience in the cash sector will need to be addressed. In assessing the impact of Cyclone Gabrielle on the cash system, RBNZ says it has monitored and assessed the state of the cash system through engagement with the cash industry, businesses and communities, establishing new data collections, and making progress on developing a monitoring framework. Work is required on cash system redesign, infrastructure and stewardship.
CBDC: the exploration of a Central Bank Digital Currency (CBDC) for New Zealand has continued and it has completed a proof-of-concept project with an external provider involving design options and use cases.
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