Transcript of Question & Answer Session Security Printing: A Central Banker's Perspective – Welcome Address to High Security Printing Asia

We have some time for questions, so can we get the questions onto the screen please? Okay, the first question is for you, Lindsay, interest rates are at historically low levels. When they inevitably rise, do you think this will result in reduced demand as they will no longer be attractive as a store of value?

That’s a very good question. I think if you were simply to look at the pure economics of it, you’d probably say yes, you would expect demand for holding banknotes as a store of value to go down as interest rates go up. But there are other things which also determine whether people hold banknotes as a store of value, and some of those things might very well be related to the ability to access government welfare programs, particularly if those programs are associated with an assets test. So, to reiterate, it seems reasonable from an economic point of view that you would expect the demand for cash as a store of value to go down when interest rates go up, but there are other factors which determine why people hold banknotes as a store of value.

Thank you, Lindsay. I think the second question is for you, as well. Do central banks try and forecast any emerging technologies that may make a dramatic impact on currency production, like Uber has done with the taxi industry?

Again, this is a very interesting question. I think central banks do try to forecast future demand for cash, but of course there are a lot of things going on in the payment space generally, which makes it very difficult to actually determine, or at least you’d be a very brave person who tries to determine, where it’s actually going to end up. I guess my view would be that if you look further down the track, we will probably be using cash a little less for payments. One of the features of a modern economy is that they offer consumers and the public choice, so not only do you have choice in the products that you can buy, but you also have choice in the instruments you can use to buy those products. It seems to me that while the public generally have a demand for cash because of the characteristics of physical cash, using cash to make payments would be one of those choices that the public can generally use.

Thank you. Your turn, Guillaume. Why would someone want to pay online in cash?

Can I add an answer to that question as well? You’re quite right. One of the concerns that online merchants have is the abandoned shopping cart. People actually choose products to fill the shopping cart, but when they get to the point of actually paying they just walk away from the computer. There are two key issues. One is the cost of transport which’s not always obvious at the initial stages when they’re selecting goods, and the other one also not clear is the cost of the card transaction. There is amongst payment system regulators a push to have those costs made transparent to consumers earlier on in the process, but certainly the cost of the card transaction is a key factor in why people abandon the shopping cart before they actually get to the point of making a payment.

Thank you. Great session, great speakers.