Transcript of Question & Answer Session Resilience, Innovation and the Future of the Payments System

Please thank Brad. And bring the questions coming through. They’re coming through now. I am mindful of our time, but we’re not going to let you off the hook here. I think I might start off, as a few more come through. I did want to start with this one, Brad. The RBA has been reinventing itself for a little while now and under the Governor Bullock, with new Boards and a fresh perspective. If you had to give the bank a report card so far, how would you score the results?

Wow, that’s a tricky one. I’m not sure it’s best practice to mark one’s own homework. But look, I won’t give you a number, but what I can say is that the bank is deeply committed - deeply committed to preserving the aspects of the Reserve Bank that have always been held in the highest regard, and at the same time exploring every opportunity to do our job more effectively.

There have been, I would say, a sweeping array of changes, actually. Some are public facing, some are more sort of internally oriented, but they have been all directed at ensuring that we can serve the Australian public more effectively, And there is the deepest levels of commitment right throughout the organisation to get that right.

Okay, great, thanks. We’ll get to a few questions here. Are we aspiring to UK, Europe, US or Singapore approach to payments of the future, and what is our Northern Star?

We’re not looking to any particular country. I think we have a world-class system here. We certainly pay close attention to developments abroad, and we’re always looking at opportunities to leverage learnings internationally, but no, we’re not trying to emulate a particular international system here. There’s many features, actually, of the Australian payment system that I find, speaking to my international counterparts, they want to know how we’re doing a certain thing. So no, we’re not trying to replicate another country. We’re always open minded about better understanding why some countries are making certain decisions, and then we’ll go away and reflect on whether there’s any learnings for us. But that’s how I would approach it.

We have a distinctly uniquely Australian payment system, and I don’t think we should shy away or apologise for that. We’ve got plenty to be proud of.

Okay. Do you see tokenisation of equity shares being a reality in the coming years? And what impact would that actually have on share registry providers?

We have deliberately - in all of our work on tokenisation, the tokenisation of assets and the future of money, we have kept a very open mind about what the most pressing use cases could be. What we have heard back from industry, where they see the biggest opportunities, has been more in the fixed income space than in the equity space. There are some aspects to our wholesale fixed income markets that have changed very little in 25 years. So that has been reflected in Project Acacia where most of the tokenisation use cases have been focused on opportunities to uplift the functioning of our wholesale fixed income markets. That is not to preclude the possibility that the tokenisation of equities takes off at some point in the future. I know the Nasdaq, for instance, are closely looking at that, as are the Europeans. But from our standpoint, the inefficiencies - when we look across our capital markets, we tend to find that there is greater scope for an uplift in the efficiency, transparency and functioning of certain aspects of the wholesale fixed income markets. A bit more so than equities. But it’s also for industry to bring those use cases to us, and we would approach those ideas with a very open mind.

Okay. And in your speech, you mentioned that cash being an all hazards digital hedge. Is it not the end of cash or is it just a life raft here? How important is cash? Are you suggesting that people actually physically have money under their bed?

No. Look, that I referred to a public campaign in Scandinavia where those discussions have been commonplace, actually, for many years. No, but look, cash, we have been consistent in making the point that for as long as Australians value having cash, we will do our bit to ensure that it is readily accessible. And we have fully supported the government in its efforts to ensure that the cash distribution system stays on a strong footing. And we’re leaning into that work right now.

As I said, one and a half million Australians are still using cash every day. And it does have certain properties in the digital age which allow it to perform a sort of contingency function that other payment systems would struggle by design to perform. So we don’t think about putting cash on a life raft. No, Australians are continuing to use it, and we think it’s got some important properties that means it should be one component of our broader suite of payment capabilities.

Okay. I am mindful of the time. We have so many questions. Can we do a bit of a fireside; just very quickly try and get some of these out? What is the role the RBA is playing in the G20 targets for cross-border payments?

This is a key priority - has been for the G20 for some time - and is going to be featuring very prominently, also under the US Presidency. So there’s discussions going on right now about what precise form the bank might play. All I can say at this point is that we are deeply committed to doing what we reasonably can at the bank to ensure that cross-border payments are safer, more efficient and cheaper.

I don’t think anyone should accept that the average cost of a cross-border payment with Australia in one leg is 5 to 6% and that payment takes a couple of days. That’s unacceptable. We shouldn’t be comfortable with that. We think there’s big opportunities to get the costs in cross-border payments down and the efficiency up in that system. So we’ll be leaning in to the G20 priorities over the next year.

And does the RBA have any concerns on the impact of the proposed interchange reforms on innovation, especially from new and smaller issuers?

We have given the issues around smaller issuers very careful consideration. As you know, this is a deliberation that is ongoing, but I can assure everyone that we are very attentive to the role that small issuers have in driving innovation in particular aspects, actually, of the card market. So that’s one of the many, many factors that are going into the pot of things that we’re considering when we’re trying to produce a package of reforms here that we think most promotes the public interest.

Thank you. So many questions. I’m surprised there was not one monetary question here. I cannot believe that. So you got off the hook there, unless you want me to ask you one?

Please don’t.

I do want to know, as the Assistant Governor of the financial system, when you’re doing your last-minute Christmas shopping online, what’s your go-to payment, or what’s giving you anxiety?

To be honest, it’s been a little bit chaotic the last few weeks, so I haven’t - I’m a little behind on my Christmas shopping, I must confess.

Right. Well, that’s an easy way out of it. You didn’t want to favour anyone.

No.

Thank you. A big round of applause, please.

Thank you.

Thank you very much.