Canada: Access to Cash in Remote Communities
Chair, CashEssentials
This post is also available in:
The population of First Nations is just under one million people, a third of which live on reserve, according to a 2016 census. There are 637 ‘bands’, defined as “a body of First Nations people who have lands or other resources set aside by the Crown for their collective use or who have been declared to be a band for the purposes of the Indian Act.” These bands gather 334,385 people or less than 1% of the Canadian population.
The Canadian government does not guarantee these communities access to telecommunications or the internet. In the absence of banks, people rely essentially on white-label ATMs to transact. The cost of transactions is significantly higher, which raises the question of the role of the central bank in maintaining an equitable paymentA transfer of funds which discharges an obligation on the part of a payer vis-à-vis a payee. More system.
The discussion paper explores access to cashMoney in physical form such as banknotes and coins. More for First Nations reserves located across Canada for three reasons:
- To assess the adequacy of cash distribution across the country.
- To evaluate whether a central bank digital currency (CBDC)A digital payment instrument, denominated in the national unit of account, and a direct liability of the central bank, like banknotes. A general purpose CBDC can be used by the public for day-to-day payments like cash. More could offset inadequate access to cash.
- To contribute to the analysis of Indigenous economic issues.
The report geolocates the First Nation reserves and crosses the data with cash points, including financial institution branches and ATMs – or ABMs as they are called in Canada – and white label ATMs – which are owned and operated by organizations which are not financial institutions.
The main findings of the report are:
- The average (median) travel distance from band offices to the closest cash point is 3.7 km (regardless of the type of cash source).
- The median distance from band offices to the closest bank branch/ATM is about 25 km, and the median distance to the nearest white label ATM is 4.5 km.
- Nearly half of band offices are within 5 km of a cash source. A quarter is beyond 20 km.
- The results are highly skewed, and some band offices are far from a cash source. 13% of band offices are over 50 km from a cash source.
- White label ATMs are the most common closest cash source, located chiefly at retail stores, gas stations and grocery stores.
The authors emphasize the critical role of the North West Company (NWCo), an essential retailer for communities in Northern Canada. Through roughly 130 Northern and Northmart stores, NWCo provides a range of retail products and various services, including post offices and financial services. The financial subsidiary, We Financial, offers tax, cheque-cashing and money-transfer services, direct deposit solution commercial credit, and a network of ATMs.
This post is also available in: