Re-Engineering Currency Circulation: An International Study of Cash Handling Models

 

IN RECENT YEARS WE HAVE SEEN A NUMBER OF CHALLENGES TO THE TRADITIONAL ORGANIZATION, MANAGEMENT AND DISTRIBUTION OF CASH INTERNATIONALLY.

These include the emergence of alternative payment forms, global economic downturns and new players in the cash processing and management industries. To combat these challenges, central banks have sought to review their cash management processes and identify solutions that can enable them to maintain the focus on their core activities in note issuance and destruction but delegate (outsource) other functions in the circulation model to third party organizations such as commercial banks and cash management companies.

 

This report looks at the change to the currency circulation process in 11 countries (Australia, Austria, Belgium, Malaysia, the Netherlands,  New Zealand, Norway, South Africa, Sweden, Thailand, United Kingdom) and summarizes their experiences, results and post implementation feedback. The report assesses the functional involvement of the central banks in each case and highlights the emergence of three main operational model types (centralized, partially decentralized and decentralized) in which the responsibilities of the central bank vary depending upon the strategy implemented and the relationship between the central bank, its commercial partners and the general public in the circulations process.

 

Central banks and industry stakeholders will be able to assess the experiences of a broad base of countries examining the trade-offs between the different operational models and the results to date of these decisions. This information will help a central bank better understand the factors that help it define future policy. This report will also help all industry stakeholders understand how their organizations must adapt to this evolving environment and let them learn from the experience of countries that have already gone through the process.