Norges Bank's Role in Cash Distribution

Abstract

During the past few years, Norges Bank has made major changes in its cash operations. These changes have been designed to adjust and clarify the division of responsibility between the various parties involved in cash distribution. Tasks have been allocated in line with this purpose. Norges Bank’s overriding consideration has been to adapt the central bank’s cash policy so as to increase the efficiency of the payment system. In practice, this involved changes which have been implemented in three stages. 1) discontinuation of commercial services 2) changes in terms for banks’ cash deposits in and withdrawals from Norges Bank and 3) changes in the depot structure and introduction of compensation in the form of interest for cash held in banks’ own depots. The result of these changes is that the central bank has assumed a more clearly defined role as wholesaler and banks have taken more responsibility for the redistribution of cash amongst themselves. Moreover, Norges Bank has assessed the organisation of the services and tasks for which the central bank is responsible. The practical consequence of these assessments is that Norges Bank’s cash operations are based largely on outsourcing. This article presents key assessments of the role Norges Bank wishes to have in cash distribution, as well as information about the changes that have been implemented in the period 2001-2005.