Cash: the Next Generation

The first in the new Next Generation Banknote series went into circulation today. This begs the $5 question: what role does cash play in our payments mix?

Michele Bullock, Assistant Governor (Business Services) at the Reserve Bank of Australia and Chair of Note Printing Australia Limited, explains that banknotes in circulation grow by around 6% per year indicating that while digital payment methods are increasing, cash has a substantial role to play in the Australian economy.

“Surveys tell us that many people still like to carry some cash as a backup in case electronic methods don’t work, or there is a surcharge. Others use cash as a budgeting tool. Many people also like to keep some cash separate from their transactions as a store of value. And, cash still has an advantage over many electronic payment mechanisms – it provides instantaneous value to the recipient. Although the New Payments Platform will offer competition in this space, cash is likely to remain an important option for many people.”

Ms Bullock says that while all payment methods – digital or otherwise – have benefits and costs, consumers should be free to choose which payment mechanism they use. As long as people are still choosing to use cash, it remains the RBA’s legislative responsibility to ensure banknotes are secure and the new series of banknotes is focused on substantially increasing the security of Australian banknotes, making them even more difficult to counterfeit.

“Australia last upgraded its banknotes around 25 years ago. This makes our current series old compared with many countries – most countries upgrade their banknotes every 7 to 10 years. The age of Australia’s current series is testament to the substantial increase in counterfeit resilience afforded by polymer banknotes. Australia has had a very low counterfeiting rate since the introduction of polymer banknotes. But while the counterfeiting rate remains low by international standards, it is increasing as technology makes it cheaper and easier to create copies of banknotes.”

The answer then is quite simple: in addition to embracing new payments methods, Australians continue to use cash, for a variety of reasons. As a result, ensuring we have the most up to date technology for our notes remains an important national priority.

Click here for more information on the Next Generation Banknotes.