wallflower in developed countries where many people have bank accounts, although this could change quickly. today it is more popular in countries where relatively fewer people have access to banking services. 4 an example of this is kenya, where many people use e - money called m - pesa. m - pesa is backed by the issuer and redeemable in the kenyan shilling. it gives people a low - cost way to transfer money using their mobile phones. m - pesa is used in some 2 million transactions each day, worth about $ 5 billion annually. that ’ s nearly 20 per cent of kenya ’ s gdp. limited access to banks is not always the main motivator for the adoption of e - money. the octopus card, in hong kong, was originally designed to pay for public transit. it proved so convenient that it is now used for over 13 million transactions each day – from transit to coffee to a pair of jeans. canadians seem to be less enthusiastic about e - money, and there appears to be little demand for something like the octopus card. we are nonetheless big users of e - payment methods that give us access to credit or our bank accounts. almost all canadian adults have debit cards, and more than 80 per cent have at least one credit card. 5 over half of all transactions in canada use debit or credit cards. at the same time, we still use a lot of cash, even if the proportion is falling over time. the total value of cash holdings in canada as a share of gdp has been relatively stable for the past 30 years. there are good reasons for this. cash is fast, convenient and costs virtually nothing to use. it is anonymous, so you don ’ t have to worry about exposing personal information to potential criminals, although for this reason cash is also used in the underground economy. people also hold onto cash as savings for a rainy day. bank of canada research suggests that changes in cash management practices could also help explain the constant demand for cash. 6 so let ’ s talk now about cryptocurrencies. some canadians appear intrigued by bitcoin – the very first bitcoin atm in the world was installed in vancouver just over a year ago. and as of last july, a quarter of the world ’ s bitcoin atms were found in canada. there ’ s one here, in kitchener - waterloo. there are also about 340 canadian merchants who say they accept bitcoin, and about 76, 000

##sts with floating currencies – may create additional shocks, including low long - term interest rates and unevenly distributed exchange rate adjustment. should any of these forces be taken into consideration in either the design of monetary policy frameworks or the choice of monetary policy parameters? flexibility and adjustment arguments for flexibility in monetary policy frameworks can be considered in the context of the broader principle that policy flexibility helps lower adjustment costs. in theory, social that view is certainly not unanimous, as i argue in " capitalizing on the commodity boom : the role of monetary policy " ( speech to the commodities, the economy, and money conference, calgary, 19 june 2008 ). welfare is reduced when there are constraints on the ability of policy - makers to optimize economic adjustment. policy frameworks should be flexible enough for the natural adjustment processes in the economy to determine the speed of adjustment to shocks. throughout this decade in canada, we have seen how policies that promote flexibility in labour and product markets reduce adjustment costs. in contrast, policy constraints on market prices – such as fixed exchange rates or subsidized energy prices – make adjustment to economic shocks more costly. if a shock is major and has widespread consequences, such rigidities impose costs on other countries because those flexible prices must adjust in an unnecessarily large or rapid way. in the face of large and possibly persistent shocks, the design and parameterization of monetary policy frameworks depends in part on the trade - off between flexibility and credibility. this, in turn, is a function of both the extent to which ( inflexible ) rules enhance credibility and our ability to make the judgments required to deploy any flexibility in a credible manner. the principle of policy flexibility is already embodied in our macroeconomic models. when we calculate the policy response to shocks in these models, it is optimal for policy to allow inflation to return to target at different speeds, depending on the type and characteristics of the shocks hitting the economy. this implies different amplitudes of the inflation cycle and different time horizons for inflation to return to target. in contrast, the parameters in today's inflation - targeting frameworks generally do not vary with the type of shocks hitting the economy. for example, the numeric value of the target itself is held constant in the face of all shocks, even though it might sometimes be beneficial to temporarily adjust it to lean against the wind. this point can also be cast in terms of making the operational target – i. e., core inflation –