Netherlands advises citizens to keep 70 euros in cash to hand: Is this sufficient?

The Dutch Social Consultation on Payment Transactions (MOB) advises Dutch people to keep 70 euros per adult and 30 euros per child in cash to hand, in case the digital payment system should suddenly come to a halt.

According to the authority, that should be sufficient to bridge three days. “The amount has been established based on calculations by the National Institute for Family Finance Information (Nibud)”, it states on the website of De Nederlandsche Bank.

Why three days?

The choice for a bridging period of 72 hours is based on a realistic assessment of a temporary, serious disruption to digital payment transactions. If payment transactions are disrupted for a longer period, alternatives such as gold might even come in handy.

Specific scenarios such as cyberattacks or outages

The three days have been chosen as the maximum period during which electronic and online payment transactions (including cash machines) are completely down, without other basic services such as electricity having failed as well.

No panic situation or total crisis

It is not based on a disaster, but on a technical or digital outage. The idea is that daily life continues as normally as possible, except that electronic payment is temporarily not possible.

Realistic and workable emergency scenario

Three days is a practically manageable period for estimating necessary expenses and maintaining a cash reserve, without leading to excessive hoarding or unrealistic amounts.

Expectation of recovery within a few days

In the event of many disruptions to vital infrastructure, it is assumed that systems will be operational again within a few days. Therefore, 72 hours is a logical time horizon.

This is stated in the report

Based on the following data, Nibud has determined the amount of 70 euros for adults and 30 euros for children as sufficient for a situation in which electronic payment transactions are down for three days (72 hours).

Assumptions of the report

The Dutch examined how much cash people need to bridge three days after a cyberattack or major outage. At that moment, using a debit card, online banking or withdrawing money from a cash machine is not possible. The report assumes situations in which:

• The electricity network is still working, but the digital payment system has failed.
• No distinction is made between income groups.
• People have no stock of food, drink and care products at home.
• Only necessary expenses are counted.

The amounts are intended for a period of five years, including an estimated inflation of 15%.

These expenses are included

Nibud bases the calculations on its own ‘minimum example budgets’. Only strictly necessary expenses are included, divided into four main categories.

Food

“We assume that the kitchen cupboards are empty”, writes the National Institute. “This means that households purchase a few basic products in addition to the daily or fresh products.”

• Five days of food are calculated instead of three, to account for the inefficiency of daily purchase of basic products.
• The food expenses are based on the recommendations of the Dutch Nutrition Centre.

Personal hygiene and self-care products

For this, the Dutch authority has converted the average monthly amount into an amount for three days.

• Included are necessary items such as toilet paper, toothpaste, shampoo and basic first aid products.
• Non-essential expenses and expenses that can be postponed such as hairdresser visits are not counted.

Transport

The transport costs are based on short journeys towards the hospital or a department store, by bicycle or via public transport. In addition, an average of 40 kilometres of commuting is taken into account – by car or by public transport.

• Including public transport or car costs for visits to healthcare, family, shops and commuting.
• Based on average transport costs over 40 km per working day.

These expenses are not included in the calculation

Personal non-essential expenses, luxury products and certain fixed costs were not included by Nibud.

• Fixed costs such as rent, energy, insurance, loans,…
• Non-daily expenses such as clothing and home maintenance
• Smoking
• Costs for pets

Furthermore, the authority does not take into account large or unavoidable expenses, such as those for special medicines, a difficult diet or taxi transport. The minimum amount is therefore intended as a basis. Households with higher, unavoidable expenses may well keep a more generous amount of cash at home.