The gradual displacement of cash by digital payment systems deprives us of privacy and anonymity in marketplace transactions. This threatens the fundamental principles of individual freedom. Governments and large financial institutions, including supranational ones, will control all human activity, and the fundamental values of civilian liberties and individual freedom will be destroyed and will be completely controlled.
Excessive displacement of cash from circulation besides greatly threatens the safety of Poland, and not only economic. Cyber attacks on digital communication and payment systems can happen at any time on a smaller or larger scale and of different character. Of course, they precede any serious aggression.
In considering the above, let us remember that cash is simply a warrant of national safety and individual freedom.
Chapter 4. publications National Bank of Poland during economical megashocks after the pandemic and in the energy crisis – past of successes
This year the National Bank of Poland celebrates the 100th anniversary of the introduction of gold into circulation. In this context, I would like to remind you of the importance of having your own currency and keeping cash in circulation, not only as a origin conducive to economical development, but besides as a stabilising social sentiment in times of global crises.
According to any experts, the usage of cash is going to suck. They call for the usage of non-cash payments only. The same people who choose non-cash payments on a regular basis, in the event of a threat caused by the outbreak of the COVID-19 pandemic or the Russian invasion of Ukraine, first of their steps were directed to ATMs and bank branches to cash out just in case.
There are besides voices in the public space that are about to end the cash. I would like to explain to you why keeping cash in circulation is needed and even essential for all citizens, including those who do not usage cash all day, and why NBP defends cash. Many myths are increasing around cash, which we are obliged to overthrow as an issuer.
The first story is that cash is about to be withdrawn from regular payment transactions. In fact, the percent of people who declare that they are mostly utilizing cash has remained unchanged since 2019 and is, excluding the years of pandemic, around 30%. At the same time, the results of the survey of payment customs in Poland from 2023 indicate that around 60% of the number and 72% of the value of payments made at trade and service outlets, offices and between individuals were made utilizing non-cash instruments.
Who creates, supports and controls non-cash trading? Non-cash payments are mainly based on solutions developed by global providers of payment infrastructure, card organisations, and alleged technology giants producing software and mobile devices. They are companies from outside Poland, and even from outside Europe, so there are doubts about, among others, the collection and usage of data generated in the payment handling process. Furthermore, these entities, together with banks, have a immense influence on the definition of the rules for the usage of payment cards and associated charges. The impact of the central bank on solutions and mechanisms in the non-cash payment services marketplace is limited. I would like to emphasise that the above proves emphatically that having your own currency and the anticipation of making cash payments in this currency that are independent of global companies is not only a safeguard against possible accidents, but besides a condition for maintaining the stableness of the state in crisis conditions.
Taking care of its own interests, the banking sector intensively supports non-cash trade.
For this purpose, the Polish Non-cash Foundation was established in Poland to grow the network of acceptance of payment instruments and to advance non-cash payments among Polish entrepreneurs and consumers.
However, it is not disputed that a decently functioning payment strategy should consist not only of an efficient non-cash market, but besides of a strong and unchangeable cash turnover that ensures the safety of this system, the anonymity of users, ease of handling payments and resilience to the crisis.
Therefore, I will stress with all emphasis that, in the face of specified strong support for non-cash trade, the NBP must take care of those who, as a consequence of the progressive digitisation and promotion of non-cash instruments, may become victims of financial exclusion due to their attachment to Polish gold in the form of cash.
I would besides like to draw attention to the fact that we are losing our anonymity through electronic payment, sharing information about our purchases, and besides risking cybercriminals to deprive us of our savings.
According to data submitted to the NBP by the banks in the reports only in the first 4th of 2024, the number of fraudulent transactions utilizing non-cash payment instruments amounted to 105.6 thousand, and their value was PLN 165.9 million, while in the full 2023, 4.1 1000 units of counterfeit cash were revealed in Poland, and the rate of undisclosed counterfeits per million authentic cash marks in circulation was 1.0. The nominal value disclosed in 2023 was PLN 371,000.
In 2024, the upward trend in the value of cash in circulation continues. At the end of June 2024, it amounted to PLN 393.5 billion. This means that during my word as president of NBP, the value of cash remaining outside the central bank's banks increased more than 2 times – by PLN 218.4 billion. The story is, therefore, to claim that cash is going to suck since its value in circulation is expanding systematically. This immense increase is, of course, the consequence of GDP growth, but it besides shows that citizens request cash – for transactional, but besides thesaurusive and prudent purposes.
Please note that the number of banknotes and coins in circulation is not the consequence of the decision of the National Bank of Poland, but only the consequence of the request for money in this form reported by economical marketplace participants (i.e. natural persons and economical operators), which is met by the NBP through banks.
The National Bank of Poland supplies banknotes and coins to banks according to their demand.
For banknotes and coins transferred by the NBP to these entities, payment is made in the form of electronic money. Thus, the NBP's putting banknotes and coins into circulation does not increase the value of money in the economy, but simply converts it from electronic money to cash. Thus, erstwhile issuing cash, NBP does not print money, but only responds to marketplace needs.
Unlike false information about the end of the cash, the fact is that during the outbreak of the COVID-19 pandemic and in the first days of Russia's aggression on Ukraine, cash became a test of citizens' assurance in the Polish financial system. Only on the first days of the war in Ukraine, i.e. from 25 February to 7 March 2022, The NBP met the unprecedented request for cash, carrying out orders of banks for banknotes and coins with a full value of PLN 42 billion, i.e. akin to downloads in the full first 4th of 2021. The NBP recorded on 28 February 2022 the historical collection of cash by banks with a evidence value of PLN 12.5 billion, i.e. 17 times the average regular collection of 2021.
This amount is besides 2 times higher than the value of the cash collected from the NBP in the first period of the COVID-19 pandemic, recorded on 13 March 2020 and amounting to PLN 6 billion. A crucial increase in request for cash during the COVID-19 pandemic and in the first days of the war in Ukraine was observed in many countries. In the first period after the outbreak of the war in Ukraine, not only in Poland but besides in another countries of the region, there was an increased request for cash, ranging from 3 times earlier average regular collections in Romania to 25 times in Lithuania1. Like in Poland, after this increase, cash returned to central banks. Based on the reaction of the cash marketplace to events in the territory of Ukraine, it should be pointed out that both in Poland and in another countries, the precautionary function of money has become important, as it gives the holder a sense of security, especially in crisis situations.
In 2022, i.e. in the year of Russia's aggression against Ukraine, the increase in the value of banknotes in circulation in Poland was 3.6% y/y – importantly higher than in the euro area (1.8%), the USA (30%), Norway (0.8%) or Switzerland (-9.9%). besides after the appearance of the coronavirus pandemic in 2020, the increases in circulation in Poland were considerably higher than in another countries. The increase in the value of banknotes in circulation in 2020 in Poland was 35%, i.e. importantly more than in the euro area (11%), the USA (16.4%), Switzerland (5.4%) or the UK (0.5%). This is the case erstwhile request for cash is rapidly expanding and its usage is changing, especially erstwhile uncertainty increases in the economy and concerns arise, for example, about the deficiency of efficiency and universal availability of electronic payment systems and the anticipation of non-cash payments.
I would like to stress that cash plays an extraordinary function during cyber attacks on the country-wide clearing system, erstwhile all forms of electronic payments and bank operations are paralyzed. In specified a situation, cash is the most resilient and allows, inter alia, trade to continue, at least in respect of basic goods and services.
Two thirds of respondents to the NBP survey keep cash in case of accident, with nearly 50% of them over PLN 1,000.
The actions taken by the National Bank of Poland in fresh hard years are proof that the central bank understands its issue function and fulfils its tasks. Despite the immense and fast increase in request for cash, the National Bank of Poland implemented in hard times the orders of banks for cash continuously and in the full denomination structure.
This challenge was possible thanks, among another things, to the National strategy for the safety of Cash Trading adopted by the NBP Management Board in 2021, a 4th before the shock increase in request for cash. This unique European paper aims to strengthen the safety of cash trading in Poland, to prevent the elimination of cash from the economical market, to defend freedom of choice of payment instruments and to advance the further sustainable improvement of the cash trading marketplace while maintaining its advanced level of security.
The strategy implements actions from areas specified as availability and acceptance of cash, smooth supply of cash, cybersecurity of IT systems utilized in cash supply processes and physical safety of cash. The National strategy for the Safety of Cash Trading was developed with the participation of the Council for Cash Trading – an opinion and advisory body appointed to the NBP Management Board in February 2019, representing marketplace representatives and regulators.
The NBP has been working intensively for years to reduce the cost of issuing cash. We have shown a large deal of prevention by changing the rate of average denominations of coins in 2020, introducing the 500 zł banknote in 2017 and the first coin exchange device in the NBP territory Branch in 2019, even before the COVID-19 pandemic. Thanks to these actions we saved a full of around PLN 400 million in the following years.
The assembly of advanced value cash-mark stocks, the streamlining and automation of processes in the NBP and the change in the regulation of processes on the marketplace caused that erstwhile the crises arrived, we were prepared for them.
The main channel of access to cash in Poland remains ATMs, which are complemented by bank branches with cash handling and the Polish Post Office SA. The number of conventional cash access points, albeit slow but decreasing. The cash access network is complemented by the cash back service.
The results of the survey carried out by the NBP show that the criterion of cash availability, adopted in the National strategy for the safety of Cash Trading, is met. As of 15 December 2023, including access point networks, about 86% of respondents have access to a cash access point not more than 5 km from their place of residence. In turn, over 98% of respondents have access to cash within 10 km of their residence.
These results were confirmed in a 2024 public opinion poll. Responses from respondents indicate that nearly 95% of them have access to the ATM within 5 km of their residence. In 2024 respondents assessed the availability of cash access points well: access to the ATM as satisfactory or alternatively satisfactory was estimated by 92% of respondents and access to the bank facility was estimated by nearly 80% of respondents.
In the age of improvement of non-cash payment transactions in many countries, the request to guarantee acceptance and availability of cash has been identified.
In Poland, on the initiative of the NBP, the statutory work to accept cash was introduced. Legislative work is underway in the euro area to increase the function of euro banknotes and coins as legal means of payment and to guarantee acceptance and access to cash. Action to defend cash is besides taken in Ireland or the Netherlands. In the United States of North America, in June 2023, a draft bill on the choice of means of payment was renewed in Congress.
Work!
In any countries, the availability of cash is already regulated. For example, in Sweden, which is celebrated for non-cash payments, since January 2021, there have been rules requiring the largest banks in Sweden, providing consumers with payment account services with basic functions, to guarantee that cash can be paid out from these accounts, i.e. cash withdrawal places in a corresponding number throughout the country. In the UK, through the 2023 amendments to the Financial Services and Capital Markets Act, Parliament strengthened the legal framework for the Financial Conduct Authority (FCA), the body liable for overseeing and regulating companies offering UK citizens all kinds of financial services. Consequently, FCA proposed fresh rules to guarantee reasonable access to cash for individual and corporate customers throughout the United Kingdom.
In any countries, initiatives based on cooperation between marketplace stakeholders and regulators, e.g. in the form of agreements, are carried out to improve client access to cash. A further agreement was reached in Belgium in the spring of 2023 on access to ATMs between the Belgian national Government and the Belgian financial services sector. In the Netherlands, in April 2022 payment manufacture stakeholders agreed to enter into a five-year cash agreement (Cash Covenant), which established voluntary measures to improve the quality of cash services.
In these hard times, erstwhile there is simply a war on the Russian aggressor beyond our east border, it is our common work to keep cash safety in circulation. Nearly 70% of Poles consider Polish gold as a national symbol. This symbol unites us, gives us stableness and a sense of security. Therefore, as president of the National Bank of Poland, I will always defend cash as a national good.
Let us appreciate what our ancestors worked so hard for, giving us a 100 years ago our national currency.
Let us remember that the appropriate level of cash in circulation is simply a fundamental warrant of individual freedom and determines the economical safety of Poland.
