Finance Minister Sigrid Kaag (D66) has announced legislation to force banks not to charge consumers for cash withdrawals in the future. To ensure that cash remains “usable, available, accessible and affordable” for users, the minister sees the need to “take action,” she writes. in a letter to the House of Representatives.
Banks make a loss on the operation of ATMs. ING, ABN Amro and Rabobank have therefore merged their ATMs together since 2011 in what is now called Geldmaat. The loss on cash decreased for the banks from 779 million euros in 2005 to 273 million euros in 2021, Kaag said in the letter. Nevertheless, the minister fears that in the future banks will pass on their losses to citizens who continue to use cash.
“Because cash is used relatively often by consumers in vulnerable positions with limited financial resources, that group in particular would be disproportionately affected,” writes Kaag. Only 20 percent of payments will be made with notes or coins in 2022, it appears facts of De Nederlandsche Bank (DNB).
‘cash fine’
Voluntary agreements are currently in force between, among others, the banking sector, the government and DNB, which keep withdrawals free of charge. This so-called ‘Cash Covenant’ expires in 2027. Kaag makes a “strong appeal” to the banks not to violate these agreements until the new legislation comes into force.
From one survey DNB revealed in April that the Dutch expect cash to continue to lose ground, especially as electronic payments are becoming increasingly convenient. At the same time, more than 90 percent of the Dutch think it is important that it remains possible to pay with cash.
DNB “endorses the importance” of the legal measures proposed by the minister, the central bank said a press release. The Consumer Association says to be “happy”. with the legal measures against a ‘cash fine’. The Dutch Payments Association, of which the banks are members, did not want to respond substantively on Wednesday. Director Gijs Boudewijn said in an e-mail that he first wanted to study the letter and underlying documents carefully.
Digital euros
Partly because of the declining use of cash – a trend visible across Europe – the European Central Bank is preparing for the introduction of a ‘digital euro’. “A banknote in a digital jacket”, DNB president Klaas Knot calls this.
Like cash, central bank digital money is a public means of payment whose value is guaranteed by the central bank. This is different from the money that is currently held in private current and savings accounts: that is a claim against one’s own bank.
In the future, citizens may immediately receive an account with the central bank or an account with their own bank on which the digital central bank money is held. They can do their shopping with it, for example with a payment app.
The digital euro must ensure that the public guarantee behind the monetary system is safeguarded, now that cash is on the wane. Incidentally, the payment method will only come into effect once the European Parliament and EU member states agree to a legislative proposal from the European Commission, which is expected in the coming months.
The ECB and DNB emphasize that the digital euro should complement cash, which should therefore not disappear. “The use of a digital euro would become completely voluntary, cash will not disappear,” Knot told NRC in April.
Read also: The digital euro is a better idea than a state savings bank, says DNB boss Klaas Knot