the tokens could be exchanged among members of a private, permissioned distributed ledger, separate from the rba ’ s real - time gross settlement ( rtgs ) system, but with mechanisms for the tokens to be exchanged for central bank deposits when required. such a system might allow the payment and settlement process to become highly integrated with other business processes, generating efficiencies and risk reductions for private business. as part of this, the tokens might also be able to be programmed and sit alongside smart contracts, enabling multi - stage transactions with potentially complex dependencies to take place securely and automatically. this seems to be the general model that some people have in mind when they talk about ‘ putting aud on the blockchain ’, although other technologies might be able to achieve similar outcomes. whether a strong case for the development of these types of systems emerges remains an open question. we need to better understand the potential efficiencies for private business and why it would be preferable for such a settlement system to be provided by the central bank, rather than the private sector ; why privately issued tokens or files could not do the job. we would also need to understand why any efficiency improvement could not be obtained by using the existing exchange settlement accounts and the npp. we would also need to understand whether and how risk in the financial system would change as a result of such a system. it remains unclear which way this could go. on the one hand, these types of processes could use a very different technology from the current system, which is based on account - to - account transfers, so they could add to the resilience of the overall payments system. but there would be a whole host of new technology issues to manage as well. to help understand these various issues, reserve bank staff have been liaising closely with fintechs and financial institutions. we also regularly talk with other central banks that have tested distributed ledger technologies in some related contexts. we are also currently working with some external entities to observe or participate in proof - of - concepts similar to those of other central banks. so this area remains a work in progress for us. conclusion this brings me to the end of the elaboration of my set of five working hypotheses. i would like to conclude by summarising. there is a lot going on in the world of payments. much of this is being driven by advances in 9 / 11 bis central bankers'speeches technology. these advances are opening

payments as well. there are various ways of tracking this shift. one is the survey of consumers that the rba conducts every three years. when we first conducted this survey in 2007, we estimated that cash accounted for around 70 per cent of transactions made by households. in the most recent survey, which was conducted last year, this share had fallen to 37 per cent ( graph 1 ). 2 / 11 bis central bankers'speeches a second way of tracking the change is the decline in cash withdrawals from atms. the number of withdrawals peaked in 2008 and since then has fallen by around 25 per cent ( graph 2 ). this trend is likely to continue. 3 / 11 bis central bankers'speeches the third area where we can see this shift is the rapid growth in the number of debit and credit card transactions and in transactions using the direct entry system. since 2005, the number of transactions using these systems has grown at an average annual rate of 10 per cent ( graph 3 ). this stands in contrast to the decline in the use of cash and cheques. 4 / 11 bis central bankers'speeches the overall picture is pretty clear. there has been a significant shift away from people using banknotes to making payments electronically. most recently, australia ’ s enthusiastic adoption of ‘ tap - and - go ’ payments has added impetus to this shift. in many ways, australians are ahead of others in the use of electronic payments, although we are not quite in the vanguard. it is also worth pointing out, though, that despite this shift to electronic payments, the value of banknotes on issue is at a 50 - year high as a share of gdp ( graph 4 ). australians are clearly holding banknotes for purposes other than for making day - to - day payments. 5 / 11 bis central bankers'speeches this shift towards electronic payments, and away from the use of banknotes for payments, will surely continue. this will be driven partly by the increased use of mobile payment apps and other innovations. at the same time, though, it is likely that banknotes will continue to play an important role in the australian payments landscape for many years to come. for many people, and for some types of transactions, banknotes are likely to remain the payment instrument of choice. 2 2. banks are likely to remain at the centre of the shift to electronic payments in australia, the banking system has provided the infrastructure that has made the shift to electronic payments possible. in some other countries, the