Currency Conference: An Industry in Change – Part 1

The Currency Conference took part in Mexico City in May 2023, overlapping with the Digital Currency Conference. This report is the first of two summaries of the conference.

Conference themes

The Currency Conference shone an interesting light on the state and priorities of the banknote ‘industry’. The focus was not on so much on cash demand as the changing payment landscape and the impact that is having on cash, with sessions dedicated to cash and contingency in times of crisis, on access to cash – innovation, regulation and legislative developments, and whether Central Bank Digital Currencies (CBDCs) are friends or foes.

Certainly, at the same time there were also more ‘traditional’ sessions on currency threat assessments, public education (but with the focus on how to use perception studies to fine tune new designs to ensure they work well) and innovation, and in addition workshops on the first day on design thinking, coin management, resilience (an IACA session) and state printing works.

Changing cash landscape

This session started with a panel of speakers from the 5 Nations group, which consists of the central banks of Australia, Canada, Mexico, the UK and US. In overview cash demand has been growing steadily but surges during times of crisis, the pandemic being a good example. Demand is primarily for store of value notes rather than transaction denominations. Since 2021 the demand for cash has started to fall back.

The 5 Nations have seen a sharp reduction in bank branches and ATMs, making access to cash more challenging, although on paper one would think that most people live within 5km of an ATM. A range of studies across the 5 Nations show that cash is important, and is perceived to be important, to significant number of people.

The central banks, response is to monitor cash use trends, to research cash use, to analyse and invest in infrastructure and to engage with stakeholders to support cash.

Steve Son presented the latest US Federal Reserve consumer payment trend survey findings. Kathleen Young, Executive Vice President and Chief of FedCash® Services, explained how they are adapting to changing payment behaviour. The key is to have flexible, scalable and resilient operations. FedCash is currently investing in new cash sorting capability and capacity, with new sensors and increased automation.

OXXO, part of the FEMSA group, presented on its SPIN card which seeks to bring the unbanked and underbanked into payments, whether using cash or not. Sonect presented its virtual ATM solution that seeks to fill the gap where bank branches, ATMs and post offices are absent.

A dip into the conference papers

New Zealand’s Future of Money paper offered a focused and pragmatic plan for addressing the challenges of a less cash world.

The Dutch National Bank and the Banco de España papers on perception studies, although in different sessions, complimented each other neatly in thinking about how to get the public to check banknotes and then how to use perception studies to train people to inspect banknotes.

Although sustainability featured throughout the programme, the European Central Bank’s report on its Product Environmental Footprint work was particularly useful. It fitted neatly with the Bank of Mexico’s work on sustainability.

The resilience session offered South Africa’s pragmatic advice based on their real experience. Austria’s civil defence preparations were also detailed with cash playing a central part. The Bundesbank has put considerable effort into developing its cash plans across all stakeholders.

The final session, a joint session with the Digital Currency Conference, looked at CBDCs highlighting the overlap and the differences of cash and CBDCs. While all take the view that both will coincide, that may be driven by necessity as much as any love of cash, given that CBDCs are in their infancy and it will take time for them to establish a clear position in the payment options.

Part 2, to be published next month, will take a further look at the various papers and themes of access to cash, currency threat assessments, public education, sustainability, innovation, resilience and CBDCs.