partly because the banknotes are staying in circulation for longer. in other words, banknotes are being printed with advanced security features to protect against current sophisticated counterfeiting techniques as well as as - yet unspecified and unknown techniques that may become available to counterfeiters over longer periods in which the banknotes are likely to be circulating. future state of play the obvious question arising from these observations is : will the current state of play continue? i would like to offer some thoughts on the future state of play, focusing, again, on the banknote segment of the market. it almost goes without saying that the outlook for banknote printing depends on the future demand for cash. there are different views on this topic, including the view that physical cash has only a finite future. i won't summarise the various views other than to say that we cannot ignore the possibility that the use of physical cash in many countries may disappear at some stage. that said, the common view seems to be that the future state – certainly in the foreseeable future – is likely in most countries to be one of relatively less cash rather than cashless. that is, cash use may decline to a level that reflects a base demand in the community for the specific characteristics that physical banknotes provide. whatever the endpoint – less cash or cashless – the journey is likely to be a steady walk rather than a quick sprint. there are several reasons for this, but two, in particular, stand out. the demand for cash the first is that, despite its declining use in transactions, the overall demand for cash in many countries is continuing to expand. in the past few years, the median annual growth in currency in circulation across international monetary fund ( imf ) countries was just under 9 per cent. [ 3 ] similar annual growth was recorded for countries participating in the pacific rim banknote conference, which includes china, korea, the philippines, australia and a number of other asian countries as well as canada and the united states. [ 4 ] in most of these countries, including australia, the ratio of currency in circulation to measures of national production is around its highest for several decades. underlying the expansion is a shift in overall demand towards holding cash for non - transactional reasons, such as a store of wealth and as a precautionary balance. even so, the use of cash for transactions purposes is still growing in most countries, albeit at a slower pace. there is, in fact, only one country in

an existing banknote design. if banknotes are staying longer in the hands of the public, it seems likely, too, that central banks will require the notes to have security features that are more overt. that is, security that can be easily seen by looking at the note or by easily scanning a banknote with a smart phone. banknotes presently have a roughly balanced mix of overt and covert security features. so there are opportunities and challenges ahead for the high security printing industry. both seem more acute in the asian region because of its large population and cultural connection to using physical cash. that is why this conference is important and timely. it is an opportunity to share experiences, consider new technologies and techniques, and, with the benefit of these, discuss and plan strategy for the changes that are likely to occur over the next decade. i encourage you to make the most of this opportunity over the next few days and i look forward to talking with you and sharing ideas and thoughts. i would also encourage you to take in the melbourne atmosphere. the city has a well - earned reputation for creativity. as always, creativity will be important in order take the opportunities ahead in the high security printing industry. once again, welcome. endnotes [ * ] i thank malcolm mcdowell and nuwan kalpage of note printing australia and my colleagues at the reserve bank of australia kristin langwasser and gordon flannigan for assistance in preparing this speech. see smithers pira ( 2015 ), ‘ the future of global security printing markets to 2020 ’, final report, june. market value, production value, production cost and value of output are used interchangeably. they refer to the value of finished production, including the cost of inputs, but not necessarily the production mark - up and are compiled from a number of sources. asia covers 28 countries. production volume data from unpublished de la rue annual banknote survey. asia covers 27 countries in the asian region. sourced from the imf's international financial statistics database. information from papers presented at the pacific rim banknote conference 2017. sourced from smithers pira ( 2015 ) and papers presented at the pacific rim banknote conference 2017. © reserve bank of australia, 2001 – 2017. all rights reserved.