The RBA might end up passing the cost of the wholesale cash distribution system onto taxpayers and take it back in house like it was in the old'n days when the paper notes would wear out more frequently. But who would accept it from the depots? Banks as part of their license? RBA atm's? Post offices? A private business charging a processing fee? It would appear that many Australians aren't using cash to transact but are hoarding a bundle of high denomination notes as an emergency store.
The cash distribution model used in Australia has evolved over time. Prior to the late 1990s, distribution activities were largely carried out by the Reserve Bank, which issued banknotes directly to commercial banks from its cash depots in each of Australia's eight capital cities.
This changed in the late 1990s, with the establishment of Note and Coin pools. Under this arrangement, Reserve Bank-owned banknotes were held in the depots of CIT companies rather than at Reserve Bank-owned depots. These pools allowed commercial banks to more easily access cash. However, this particular arrangement was relatively short-lived. The introduction of polymer banknotes reduced processing volumes substantially due to their greater durability, creating inefficiencies and prompting a rationalisation of the Reserve Bank's role in cash processing. Due to this, and requirements to meet competitive neutrality provisions, the ownership of these cash pools was transferred to commercial banks in 2001. These changes were formalised in the Cash Distribution Deed (CDD) – agreements between the Reserve Bank and eight commercial banks, and a precursor to the current BDA arrangements.
