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The Netherlands: Stakeholders Sign Covenant to Ensure Proper Functioning of Cash

Categories : Cash is a contingency and fall-back solution, Cash is a public good, Cash is universal
April 12, 2022
Tags : Access to cash, Central Bank, Commercial bank, Netherlands
Twenty-three Dutch organisations closely involved in the payments system signed a new Cash Covenant this week. The agreement seeks to ensure that cash continues to function properly as a payment instrument in the face of a steady increase in electronic payments.
Guillaume Lepecq

Chair, CashEssentials

This post is also available in: Spanish

Cash payments have been declining steadily in the Netherlands over the past decade, and the pandemic has further accelerated the decline. According to the De Nederlandsche Bank (DNB) daily payments survey, the share of cash transactions dropped from 30% to 15% during the pandemic. It has since bounced back to 20-25%.

The Netherlands: Share of Cash Payments, 2020-2021

In July 2021, the DNB called on stakeholders in the cash cycle to enter into agreements to ensure that cash remains readily accessible and available for the next five years.

Last week, the major Dutch banks, the Dutch Payments Association, representatives of consumers, retailers, the hospitality industry, petrol stations, cash services providers, and the DNB signed the covenant. The agreements will, in principle, be in place for a period of five years. The Minister of Finance presented it to the House of Representatives.

No fee increases until mid-2023

The covenant sets out agreements among the parties to safeguard cash’s permanent availability and accessibility. They cover various topics related to cash, such as the number of ATMs, fallback options for electronic payments, an inclusive payment system, and anti-money laundering measures. Banks have agreed to keep fees for cash services unchanged until mid-2023.

Cash is under pressure

The new agreements were reached amid the declining use of cash at points of sale in the Netherlands and a cash infrastructure under pressure. For example, bank branches provide fewer cash services increasingly, the number of ATMs is declining, and retailers’ unit costs of cash transactions are rising.

Safeguarding the public interest

If cash were to disappear, problems could occur in the event of disruptions in electronic payments since cash functions as a fall-back option in such cases. In addition, it could be problematic for those who depend on cash as their main means of payment. Moreover, cash is a public good. It is in the public interest that everyone in society can use it without any problems and maintain good access to it.

Research on funding and market organisation

Besides laying down specific agreements for the next five years, the covenant also marks the start of a new study that should explore how the public interest in cash is best safeguarded in the longer term. With the use of cash in a steady decline, questions about cash’s funding and market organisation arise. The study will identify various options and should be completed within ten months of the covenant’s signing. The Minister of Finance can subsequently advise the House of Representatives, after which decision-making can occur.


This post is also available in: Spanish