This article was first published in the October 22 issue of Currency News. It is republished here with the permission of the editor.
The mintAn industrial facility manufacturing coins. More community has woken up to the fact that its core product is under threat. A decade ago, the prevailing view was that coins have always been around; ergo, they will always be around. The mints don’t think like that anymore – their often history-long histories and the fact that the majority are still state-owned cannot safeguard them from changing paymentA transfer of funds which discharges an obligation on the part of a payer vis-à-vis a payee. More behaviour.
Hence their increasing engagement in the broader cashMoney in physical form such as banknotes and coins. More industry. The coinA coin is a small, flat, round piece of metal alloy (or combination of metals) used primarily as legal tender. Issued by government, they are standardised in weight and composition and are produced at ‘mints’. More and banknoteA banknote (or ‘bill’ as it is often referred to in the US) is a type of negotiable promissory note, issued by a bank or other licensed authority, payable to the bearer on demand. More communities, which have often clashed in the past, are coming together to defend and promote their common interest – namely, a healthy and functioning cash system.
For too long, there has been a view that coins are a ‘poor relation’ and even seen as a threat to banknotes in some quarters. This is welcome and long overdue. However, the danger from the payments industry means such attitudes are counterproductive.
The evidence of growing cooperation, between the mints, between mints and banknote producers, and between all the players in the cash cycleRepresents the various stages of the lifecycle of cash, from issuance by the central bank, circulation in the economy, to destruction by the central bank. More and beyond is gathering pace.
First is launching not one but two associations for the minting community. One, the International Mint Directors Network (IMDN), is the successor to the MDC (Mint Directors Conference) group, with a focus on advancing and promoting the best in coins, be this in sustainable production or new channels for public engagement.
The second is the Mint Industry Association, which is focused on advocacy and lobbying.
Then there is the MDWG (Mint Directors’ Working Group), comprising 28 mints and NCBs in the eurozone. It has joined forces with the banknote community to commission and fund a study entitled ‘The Environmental Impact of Cash vs Digital Payments’, which is believed to be the first example of coin/banknote cooperation on this scale.
Alongside these changes in the coin, the industry is the activities of associations such as the International CurrencyThe money used in a particular country at a particular time, like dollar, yen, euro, etc., consisting of banknotes and coins, that does not require endorsement as a medium of exchange. More Association (ICA) and the International Association of Currency Affairs (IACA), encouraging participation from coin and banknote producers. In parallel is the think tank CashEssentials, among whose members and partners are not just companies involved in cash managementManagement and control of cash in circulation. More and banknote production but also Monnaie de Paris, which is emerging as the most vocal advocate for cash amongst the minting community.
We are also seeing national advocacy groups develop, such as Denaria in Spain, which involves cash service providers and consumer groups. In Austria, consumer groups are working with the Austrian central bank and mint to support a framework for cash used in the future.
The Cash Covenant signed earlier this year by 23 organisations involved in the Dutch payment system is slightly different. The Dutch National Bank (DNB) led this to counterAutomatic device for the counting of banknotes or coins. More the steady increase in electronic payments in the Netherlands and the effect this had on cash usage. DNB wants to ensure that cash functions correctly as a payment instrumentDevice, tool, procedure or system used to make a transaction or settle a debt. More. Major commercial banks, the Dutch Payments Association, representatives of consumers, retailers, the hospitality industry and fuel stations, providers of cash services and the DNB signed the covenant.
The cash community can’t compete in monetary terms with the marketing budgets of the global payments industry members such as Visa and Mastercard. What it can do, and is doing, is organise to make a case for what is, after all, still the world’s favourite way to pay.
The cash industry can, and must, continue to put the facts about cash in frontFacade, face. See Obverse. More of central banks, legislators and regulators, to work with groups in society who see the value of cash for lower-income groups, the disadvantaged, small businesses and pro-choice campaigners, and ensure that the economic, environmental and social costs of cash are as competitive as they can throughout the cash cycle.
All that the industry is asking for is a level playing field – one in which choice is available and where the bigger marketing budgets, commercial power and louder payments of big payment companies do not hide the actual value of cash. Cash mustn’t be bullied out of the market.
The competitive pressures within the cash industry will always be there. Suppliers have products and solutions to sell, and nothing should get in the way of regular competition and market needs.
But such cash products and solutions can only exist in an environment where the demand for cash exists. This spirit of industry cooperation and putting aside competitive interests is essential if that environment continues to exist.