New Zealand Cyclone Highlights the Need for Cash
Mar 13, 2023
The Reserve Bank of New Zealand (RBNZ) is exploring new ways to strengthen access to cash in the wake of a devastating cyclone that left thousands without power or telecoms coverage, rendering cashless payments unusable.
Cyclone Gabrielle—among New Zealand’s worst weather disasters—struck the uppermost region of North Island in mid-February, leaving at least 11 dead and causing substantial damage to homes, businesses and infrastructure.
In the days following, The Straits Times reports people were only able to buy essentials such as food and water using cash, as other payments were unavailable until electricity and communication networks were restored.
What it is showing is the importance of physical cash still in society today.
The RBNZ is investigating options for improving access to cash, such as the possibility of non-banking entities such as supermarkets, which already offer cash withdrawal services, could play a greater role in the circulation of physical money.
RBNZ Governor Adrian Orr adds that ‘cash management operations are a critical component of financial stability’, noting that banks driving for a cashless society risks leaving the economy vulnerable.
You’re seeing and reading some horrific stories out there at the moment of isolated communities. When people lose the ability to transact, when they don’t have a means of exchange, then social cohesion is very quickly challenged.
RBNZ has long recognised the importance of cash to a stable economy, with Assistant Governor Silk referencing it as ‘an accessible form of payment’ valued for its contribution to ‘inclusion and wellbeing across society’ at a conference in January. It also reported cash use had seen a small year-on-year rise in its August 2022 payment survey, with 47.5 percent of people saying they use it for everyday expenses and 81.4 percent saying they keep a store of it at home.