from the university of toronto, a winner of a bank of canada fellowship award, is doing innovative work in this area. of course, we will also continue to talk directly to canadian companies to gather intelligence on the spread of ai. the future of money finally, there is the central banker ’ s favourite subject, money. technology is affecting how canadians make payments, so it will affect money too. to start with, payments canada is working with the bank and with the major financial institutions to modernize our core payments systems. this will allow for wider access and more innovation. the first stage is to replace the wholesale system, now over 20 years old, which manages transfers between major financial institutions and through which the bank of canada operates. most of the work on the new wholesale system should be completed in 2020. now, the wholesale system handles most of the dollar value of payments. but there are thousands of times more retail transactions on any given day. so, modernizing the retail payments system is a top priority. two to three years from now, you will be able to execute transactions between yourselves in real time — a major advance over today ’ s lags. these prospects have the bank thinking hard about the future of money, especially cash. a decade ago, more than half of all transactions in canada were done with cash. today, that number has dropped to about one - third. it is more and more common to see people tap a card or take out their phone to make a payment. canadians are also doing more business online, and more than half of us have sent money with paypal or interac e - transfer. certain businesses have begun to accept only electronic payments. 4 / 6 bis central bankers'speeches i believe that central bank money — the bank notes you have in your pocket — will always provide an important public good : an individual ’ s sovereign right to make payments with an instrument that is universally accepted and final. a private digital currency cannot deliver that, regardless of how widespread its use may become. the other nice thing about cash is that it will still work even during power blackouts or cyber attacks. as a consequence, bank notes will probably always be around to some degree, if only as a contingency for unusual events. all things considered, then, it is an open question whether the bank of canada would ever see the need to issue a currency in digital form as a substitute for cash. nevertheless, the world of money is evolving very rapidly, so we need to

develop plans to deal with whatever contingency arises. we will have more to say about this early in 2020. given this context, the bank needs to think about other emerging payment technologies. these include cryptoassets, such as bitcoin, as well as stablecoins, such as libra. because these are potentially global, they are attracting attention from central banks and other regulatory authorities. such innovations will bring new risks to the financial system. we need to understand these risks and apply appropriate regulation. one area of particular interest to central banks is cross - border transactions. as usual, the bank will be working on many more issues in 2020 than i have been able to summarize here. before i conclude, though, let me mention one topic that has garnered a lot of interest lately : modern monetary theory. essentially, the idea is that governments that can issue their own currency can never go bankrupt. accordingly, rather than borrowing from the public by issuing bonds, governments should spend as much newly issued money as needed to keep the economy growing and maintain stable inflation. this sounds like modern monetary theory is offering a free lunch, and most of us know there is no such thing. first, the idea is not monetary. government spending is a fiscal decision, not one for the central bank. second, the idea is not modern. it has been tried many times in the past, and the record is not pretty. for example, in the late 1960s the us government was running large fiscal deficits to finance the war in vietnam. this led to very rapid money creation. the result was a breakdown of the bretton woods system of fixed exchange rates and a surge in global inflation spanning the 1970s. there are far better means of avoiding slow growth and deflation — promoting innovation, providing infrastructure, removing impediments to international and intranational trade, eliminating red tape — just to cite a few obvious examples. with stronger trend growth, fiscal and monetary policy can focus on buffering economic fluctuations. conclusion it is time for me to conclude. we can see the broad forces of low interest rates, rising debt and technological change working in combination to stress households, companies and governments. the impact of these forces will keep the bank of canada busy in 2020 and beyond. the precise way these forces will unfold is highly uncertain. all of us — consumers, business people, policy - makers — will have to deal with these sources of uncertainty over the long term. that sounds challenging, and i