Tony Richards, the central bank’s head of payments policy, said central banks, including the Bank of England, the Bank of Canada, and the Peoples Bank of China, are exploring digital versions of their national currency.
They believe that digital dollars will one day circulate in parallel with old fashioned banknotes and other existing forms of our national currency.
Nigel Dobson, ANZ Bank’s head of group payments management said most banks think they already have a digital currency, but if it should no longer be held by them, regulators would still need to oversee it. “A digital currency issued by a central bank may not be held in a bank account,” he told the Payments Innovation conference in Sydney on Tuesday. “But I guarantee you that digital wallet will have to be transparent and regulated for the purposes of anti-money laundering, counter-terrorism financing and so on.”
But given the risks around cyber security and cryptography, it believes full-scale issuance of digital currency in any country “is still some time away.”
Mr Richards said cheques were continuing to decline and that decline would likely steepen once a new payments system was in place in early 2018. “There is a lot happening in the payments industry at present, so my sense is that it would be premature to have a serious discussion about possibly phasing out cheques before the implementation of the New Payments Platform,” he said.
“By early 2018 another two years will have passed and there will no doubt have been a significant further decline – based on current trends, a further 30 per cent or so – in cheque usage. By that point, more organisations and individuals will have further reduced their cheque usage.”
The superannuation industry was reducing its cheque usage along with government departments. Even property transactions were increasingly occurring without a cheque changing hands, he said.
“With more and older households now using the internet, their use of cheques is likely to continue falling. Indeed, I’m sure we all have a story about an older family member or friend who has recently bought or received a tablet or notebook and discovered the benefits of being online,” he said.
Mr Richards noted that cash transactions were also falling but, unlike cheques, demand for physical notes had increased. A survey for the RBA has found that the use of cash has “declined significantly, with the proportion of all transactions involving cash falling from 70 per cent in the 2007 survey to 47 per cent in 2013”, he said.
“The growing demand for holdings of cash suggest that it continues to have an important role as a store of value and there is some evidence – from demand for larger denomination notes – that this increased following the global financial crisis,” he said.
“Significant parts of the population appear to remain more comfortable with cash than with other payment methods in terms of ease of use for transactions or transfers, as a backup when electronic payment methods may not be available, or as an aide for household budgeting.”