The availability of banknotes “was important from a financial stability perspective” the Reserve Bank of Australia has told industry representatives participating in a Working Group on the future of cash distribution.
Following a request by Banking Day under Freedom of Information, the RBA on Friday released the draft minutes of the first meeting of this Working Group, held in the first week of February.
Chaired by Michelle McPhee, the RBA’s assistant governor for business services, the group comprised nine executives from the four major banks, three from the Australian Banking Association, including the CEO Anna Bligh, Armaguard CEO Mick Cronin and two from Treasury.
This group convened to begin driving forward industry discussions authorised late last year by the ACCC following an application by the ABA, alarmed at the commercial position of Armguard only months after its takeover of Prosegur (one which gave Armaguard a market share of cash-in-transit of more than 90 per cent).
“In terms of scope, it was agreed that the overarching objective of the group would be to develop a business case for potential new models for cash distribution” the minutes read.
“A utility model could be one option, but other solutions should also be considered (including potential adaptations of existing arrangements).”
The group also agreed Coin should be within scope when considering a potential new model for cash distribution.
“Coin was a significant issue for the industry and there was potential for cost savings.”
The ABA advised that they were in the process of procuring, on behalf of the major banks (which run the cash pools) “an independent expert to help with modelling of the cash cycle and development of options for cash distribution.”
This is believed to be McKinsey.
It was anticipated that a report would be available in around 12 weeks, the minutes said, so roughly a month ago if completed on time.
The ABA agreed to share the scope of this work with the RBA once the expert’s study was finalised.
The RBA declined to release, under FOI, the minutes of six meetings of two other working groups deliberating on related facets of the current controversies around cash distribution. These are the Wholesale Banknote Distribution Roundtable and the Business Continuity Planning Working Group.