philip lowe : remarks at reserve bank board dinner remarks by mr philip lowe, governor of the reserve bank of australia, at the reserve bank board dinner, melbourne, 1 october 2019. * * * good evening. on behalf of the reserve bank board i would like to thank you for joining us at this community dinner. the board held its monthly meeting here in melbourne today. this was the first meeting that we have held in our new offices on collins street after last year selling our building on the corner of collins and exhibition streets. so even if we are in a different location, it is really good to be back in melbourne. as you are probably aware, at our meeting today, the board decided to cut the cash rate by a quarter of one per cent to 0. 75 per cent. this decision followed a detailed assessment of both global and domestic developments. globally, the main issue at the moment is the uncertainty generated by a series of geopolitical events, particularly the us – china disputes over trade and technology. understandably, this uncertainty is causing many firms around the world to sit and wait before proceeding with costly investment decisions. at the same time, many businesses are having to deal with disruptions to their supply chains. the result of all this is that after a period of reasonable growth in the global economy, the risks are clearly to the downside. central banks are responding to these downside risks by lowering interest rates. with inflation low – and expected to remain low – they are seeking to take out some insurance against the possibility of a noticeable slowdown in economic growth. from a longer - term perspective though, central banks have for some time been responding to fundamental shifts in the global appetite to save and invest. the underlying explanation for low interest rates globally is that the global appetite to save is high relative to the global appetite to invest. like many things in economics it comes down to supply and demand. when the global supply of savings is high relative to the global demand for funding to invest in new capital, the price of savings – or the global interest rate – is going to be low. there are certainly other factors at play as well, but savings and investment decisions are at the heart of the issue. this means that the key to a return to more normal interest rates globally is addressing the factors that are leading to the low appetite to invest, relative to the appetite to save. this is mainly a task for governments and businesses, not for central banks. whether or not this will happen,

to undertake illegal transactions. finally, it appears that between 5 and 10 per cent of banknotes are either simply lost, maybe at the beach, or destroyed, perhaps in a natural disaster. so, as best we can tell, that is where all the banknotes are. one indicator of the decline in the use of banknotes for day - to - day transactions is the fact that the value of cash withdrawals through atms has fallen by a quarter over the past decade. australians have clearly embraced the convenience of contactless payments. we are also increasingly embracing payments through australia ’ s fast 24 / 7 payment system, the new payments platform. if you have not already got your payid to use the simple addressing feature of this new system, i encourage you to get one. if your bank is not offering this new fast payment service to you, i encourage you to ask them why. and if you are not happy with the answer, give some thought to switching banks. before finishing i would like to return to the question of why we have been issuing a new series of banknotes. the main answer is to keep ahead of the counterfeiters. we have long had one of the safest and most secure currencies in the world. the level of counterfeiting in australia is low and declining, with around 15 counterfeits detected per million banknotes in circulation in recent times. this compares with rates above 50 for some other major currencies. but the counterfeiters don ’ t stand still and we need to stay ahead. so we have added new high - tech security features to the new banknotes so that they remain safe, secure and reliable. for those of you who still use banknotes for your spending, it would be good to see a bit more use and spending out there. 3 / 4 bis central bankers'speeches finally, i would like to thank you again for joining us this evening. we are looking forward to hearing directly from you about how things are going here in victoria. 1 for more information, see finlay r, a staib and m wakefield ( 2018 ), ‘ where ’ s the money an investigation into the whereabouts and uses of australian banknotes ’, rba research discussion paper no 2018 – 12. 4 / 4 bis central bankers'speeches