billion pieces valued at 168 billion. as the demand for notes and coins is subject to diverse socio - economic, behavioural and other often unpredictable factors, the task of forecasting demand for currency is a challenging task and can be subject to large variations. at present, the system poses considerable difficulties in capturing the structural and cyclical demands for currency and projecting demand with precision. i would, therefore, also take this opportunity to extend an invitation to the delegates present here to come forward and see if they can work with us for making accurate projections for the demand of banknotes and coins. 8. the other challenges in currency management relates to ensuring durability of banknotes, ensuring adequate supply of all denominations, improving operational efficiency in distribution of notes by controlling cost of handling, distribution and security in transit / storage, providing last mile connectivity at reasonable cost, ensuring equity in distribution and repositioning rbi as an upstream facilitator in the fresh note / coin supply chain, rather than as a retailer with limited reach. let me highlight the challenge associated with durability of the banknotes in india by giving some figures. we in india, withdraw more number of banknotes from circulation than the number of banknotes collectively produced by all countries taken together with the exception of china. in fact, we are constrained to withdraw over 75 % of all notes that we circulate every year as may be seen from the table below : 9. such massive withdrawal of banknotes from circulation not only means additional cost for printing of fresh notes but also additional requirement of various resources used in production of banknotes. in this context, it becomes imperative that efforts are made to enhance the durability of the banknotes so that not only the wastages are reduced, but also resources are utilized in a sustainable manner, thereby ensuring that the environmental footprint of our currency management operations is minimized. 10. mechanization of soiled note processing while augmenting capacity has also thrown up new challenges like ensuring standardization of machine parameters, slow progress in improvement in processing capacity by commercial banks and security risks on account of manual intervention. another challenge with the likely potential to evolve into a reputational risk for rbi is the shortage / “ perceived ” shortage of coins and the lack of understanding on the exact role of the central bank in its distribution. it needs to be understood that while the bis central bankers ’ speeches responsibility for issue of coins is that of the government of india ( goi ), rbi ’ s role

, given current projections for the economy, to encourage a noticeable rise in household indebtedness, even if doing so might encourage slightly faster consumption growth in the short term. conclusion so in each of the three areas i have talked about this evening – the financial sector, the fiscal arena and household balance sheets – the story is broadly similar. stronger buffers give us more options. and more options promote stability and prosperity. if we skimp on the buffers then we expose ourselves to more risk. it is true that building these buffers does not come for free. in the financial sector, it might mean lower returns on equity or higher lending margins. in the fiscal arena, it means difficult trade - offs about recurrent spending and taxation. and in the household sector, it means consumption growth is slower for a time than it might otherwise be. but this is the nature of insurance. you pay a premium for protection against future uncertainties and to provide resilience. of course, we need to make sure that this premium is not too high. but it is surely better to pay the insurance 10 / 11 bis central bankers'speeches premium when the sun is shining than when the storm clouds are building or, worse still, to seek insurance when it is too late. i am very conscious that this evening i have spoken a lot about providing resilience against future shocks. before finishing, i want to point out that i am doing so not because we are predicting difficult times ahead. the reserve bank ’ s central scenario for the australian economy remains a relatively positive one. instead, my focus tonight probably reflects the inherent cautiousness of a central banker. just as the past 25 years have seen numerous shocks to the global economy, chances are, so too will the next 25 years. in the past, we have been served well by the economy ’ s flexibility and the buffers that we had. being realistic, we will probably need these buffers again some time in the years ahead. at the moment, though, our economy is adjusting better than many predicted to the unwinding of the mining investment boom. over the next year, we are expecting the economy to grow at around its potential rate, before picking up a bit in the following year. we also expect some further modest progress in lowering unemployment, although spare capacity remains. the low interest rates are helping to support the economy. and the decline in the exchange rate over recent years has assisted a number of industries. survey measures of business conditions