1. INTRODUCTION AND SUMMARY
1.1 This submission on the Reserve Bank of New Zealand’s Keeping Cash Local consultation is made by The New Zealand Initiative (the Initiative), a Wellington-based think tank supported primarily by major New Zealand businesses. In combination, our members employ more than 150,000 people.
1.2 The Initiative undertakes research that contributes to the development of sound public policies in New Zealand, advocating for a competitive, open, and dynamic economy and a free, prosperous, fair, and cohesive society.
1.3 The Initiative’s members span the breadth of the New Zealand economy and include registered banks that would be subject to the proposed cash-services standard. The views expressed in this submission are those of the author rather than the Initiative’s members.
1.4 The Reserve Bank launched this consultation as a proposal that banks “must provide” a minimum level of cash services.1 The consultation paper proposed making New Zealand’s banks subject to a minimum standard for cash services, grounding the obligation in banks’ “social licence”.2 Two months into the consultation period, the Bank’s legal-basis paper said its “current preferred option” is a voluntary standard rather than a regulation or statutory requirement, with statutory options under current law to be investigated only if a voluntary standard cannot be put in place.3
1.5 A consultation on a mandatory legal standard is a different exercise from a consultation on a voluntary industry arrangement, a negotiation conducted under the shadow of possible compulsion, or a case for future legislation. The legal instrument, the identity of the statutory decision-maker, and the further steps required to create an enforceable obligation are not incidental implementation details; they determine the nature of the
proposal on which people are being asked to submit. Submitters are entitled to know what they are being asked to assess.
1.6 The released record shows that officials understood the distinction between voluntary agreement, cost recovery, regulation, and new legislation. In July 2025, Assistant Governor Karen Silk recorded that the Bank’s “real desire” was that banks be required to deliver cash services, which “would require legislation”.4 In January 2026, the Bank told the Minister of Finance that it had limited immediate powers and that new primary
legislation would be the most direct way to require banks to continue providing cash services.5 And the legal-authority question was an old one: the Bank asked for an express cash-access power in 2019, and Parliament, in two subsequent overhauls of the Bank’s
legislation, did not provide it.6
1.7 The Initiative’s objection is therefore one of legality and regulatory governance. At launch, the Bank had no presently exercisable power to impose the standard on which it consulted. Its earlier internal advice said compulsory delivery would require legislation. The DTA route later advanced by the Bank depends first on regulations made by the Governor-General on the Minister’s recommendation, following a decision by the
Minister and Cabinet; only then could the Bank issue a standard.
1.8 The Bank presented a potential mandatory outcome without identifying the operative legal instrument, the responsible decision-maker, or the further statutory steps needed to create an enforceable obligation. Respondents were invited to assess the proposal as though the Bank had existing authority to impose the standard. At the same time, the Bank was seeking voluntary commitments from regulated firms while developing
regulatory, cost-recovery, and legislative backstops. The process therefore used an unsettled prospect of compulsion as negotiating leverage against regulated firms.
1.9 Nor does the proposed standard become desirable if a lawful implementation route might ultimately be found. In economic substance, a mandatory standard would create a tax-like obligation outside the Budget process. The legal incidence would fall on banks, but its economic incidence could fall in varying proportions on borrowers, depositors, fee-paying customers, shareholders, employees, and suppliers. Where broad public benefits are the intended objective, it is difficult to see why that burden should not fall on the tax base through an appropriation. The Bank should not conscript private firms to provide those benefits, and it should not procure them through a “voluntary” agreement negotiated under regulatory pressure.
