this technology. more recently, the use of pc - banking and the internet to initiate transactions have been growing rapidly in popularity. cheques are progressively disappearing, but - contrary to longstanding predictions of a " cashless society " - the use of currency has continued to grow. in the wholesale markets, the kiwi interbank transfer system ( kits ) began in 1987, to handle electronically some payments between the four big banks. it was replaced in 2000 by the same - day cleared payment service ( scp ), which can handle interbank payments and payments between bank customers on a real - time basis. in 1990, the reserve bank commenced to operate the austraclear system under licence. this system, as you know, provides a depository for debt and equity securities, the facility to transfer these securities on a real - time delivery - versus - payment basis, the facility to make cash payments, and a platform for the automated provision of intra - day liquidity to the banking system. settlements amongst the banks in respect of each day's transactions used to take place on the books of the reserve bank - everything was netted down to a single number that each bank either owed to the system, or was owed by the system, and the banks'accounts at the reserve bank were debited and credited accordingly. no doubt this procedure started with a ledger, a clerk and a quill pen, and it didn't change much until 1998 when the electronic exchange settlement account system ( esas ) was introduced. this system enabled three main changes : • large interbank transactions could now be settled on the reserve bank's books at any time during the day, without having to wait until the end of the day, and without having to be included in the end - of - day netting wash - up. this is called real time gross settlement ( rtgs ) • austraclear transactions were now also settled using esas, giving the securities market delivery - versus - payment in central bank money ( austraclear had previously been dvp in commercial bank money ). new zealand was one of the earliest countries in the world to achieve this outcome. • reserve bank operations to provide intra - day liquidity to enable these real - time transactions were automated though an " autorepo " facility finally, late last year, the new zealand dollar entered the cls system, which provides a payment versus payment service for settling foreign exchange transactions. this substantially reduced the largest remaining settlement risk

that some of these prices reflected unrealistic expectations of future income growth. but the extent to which these prices got out of line with long - term trends was relatively minor compared with the inflation in asset prices in some of the countries of asia. we are quite unlikely to see the 60 to 80 per cent fall in such prices which have been common elsewhere in the asian region. and we have not ( in the last few years ) seen ‘ price bubbles ’ in either commercial property or equities. of course, in part, the absence of significant asset price bubbles in new zealand is a direct result of the fact that monetary policy here was leaning hard against inflationary pressures throughout the middle part of the decade. while that attracted a great deal of criticism at the time, it now means that we don ’ t face the painful adjustments which inevitably follow when asset price bubbles burst. thirdly, and related in part to the substantial absence of asset price bubbles, we have a banking sector which is arguably as strong and as competitive as at any time in new zealand ’ s history. this is in marked contrast to the situation in all of the troubled countries of asia. indeed, the troubled countries of asia are in an important sense defined as those where the banking sectors are in serious trouble. fourthly, we go into this period of turbulence with a ratio of net public sector debt to gdp of only some 25 per cent, less than half the level as recently as 1992. this ratio is one of the lowest in the oecd. while the government does owe some of this debt to foreigners, the foreign currency component of the public sector debt is exactly matched by foreign currency assets, so that the crown has no net foreign currency debt at all. as everybody knows, government has been running fiscal surpluses for the last five financial years, and is budgeting to continue doing so for the next three years. this clearly gives the country considerably more room to manoeuvre than if we were already running substantial fiscal deficits. and perhaps most important of all, new zealand has a floating exchange rate regime, and has had since march 1985. this has two hugely important implications. first it means that the value of the new zealand dollar adjusts day by day and month by month as supply and demand change. this in turn means that, if there is a perception that new zealand is in a difficult period, for whatever reason, the new zealand dollar tends to fall in value ( and vice versa ). this