the decline in cash use and access, and how it affects those who need it ; explain how we aim to ensure the cash system remains fit for purpose ; identify some trends in central bank digital currency ; and provide a holistic view on the way forward. there are four key messages i want to leave with you today : 1. cash is being used less as a means of payment and access to cash is declining. however, cash provides important benefits to many people, including legal tender money, social and financial inclusion, peer - to - peer payments, backup payments, privacy and autonomy. to preserve the benefits of cash for all who need them, the reserve bank is taking on the role of steward of the cash system. we encourage every banking sector participant to consider their role supporting their customers and their access to cash. 2. recognising the reserve bank ’ s role and responsibilities – as issuer and steward of new zealand ’ s money and operator of key payments systems – we are building our analytical, policy and governance capability to support this strategic leadership. in the years ahead, some of the biggest questions facing central banks could well be around the future of money itself. 3. our immediate priority is to work with the banking and service industries to ensure that the cash system continues to be fit for purpose. this will include reshaping vaulting arrangements, banknote standards, and building towards a sustainable future. ultimately, it could, for example, involve a more transformational utility solution. 4. looking forward, we remain open minded about how the technology of money and payments will continue to evolve. central banks around the world, including us, are researching retail central bank digital currencies ( cbdc ). although we have no imminent plans to issue a cbdc, we are well - connected and considering these developments very closely. to issue currency that meets the needs of the public, we must take a new and holistic approach. we acknowledge there is much work to be done. we do not yet have all the answers, nor do we expect to find them alone. however, by working together with new zealand we want to be ‘ on the money ’ now and in the future. a brief history of money in new zealand2 before i begin, let me give you a brief history of money in new zealand. the way we pay in new zealand is continuously evolving. in the earliest days of our country, trade and commerce was facilitated within economic systems based on tikanga. gift

to 3 percent for the rest of the country ( figure 5 ). as a summary measure of excess demand, this points to the auckland housing shortage getting worse, not better. in addition, the volume of house sales is picking up in other areas such as waikato, bay of plenty and northland, and this could translate into growing price pressures in those markets. looking at key house price ratios suggests an increasing degree of stretch in auckland prices relative to sustainable levels. house price - to - income ratios have increased from around 6 to almost 9 in auckland since 2012, a level seen in some of the world ’ s most expensive cities – cities such as london, san francisco and sydney. for the rest of new these estimates are broadly in line with estimates produced by the auckland council and productivity commission. bis central bankers ’ speeches zealand, the average price - to - income ratio is about half auckland ’ s level ( figure 6 ). similarly, rental yields have fallen materially in auckland, and are currently at historic lows of below 3 percent. while low interest rates explain much of this downward trend, rental yields in the rest of new zealand have remained well above auckland yields ( figure 3 ). auckland is increasingly being seen as a regional ( asia - pacific ) centre, and this no doubt accounts for a part of the stretch in price - to - income ratios. however, good long - run fundamentals do not make auckland immune to a correction. international evidence shows that the further house price - to - income ratios deviate from historical norms, the greater the potential for a sharp and damaging correction. 4 in auckland ’ s case such a correction could be triggered by a range of domestic and external factors. the demand for housing would be reduced by a slowdown in the economy, which could result, for example, from continued weakness in export prices ; or a drop off in the net inflow of migrants. externally, if the current slowdown in china persists or accelerates then the flow of funds from that source could diminish. or we could see an increase in the risk premium in new zealand interest rates – either due to a global financial shock or due to a perceived increase in new zealand specific risk. indeed recently we saw an indication of this with standard and poor ’ s reducing the stand - alone rating of the new zealand banking system, citing heightened risk in auckland housing as their primary concern. 5 interest rates internationally are at historic lows and well below rates seen in recent decades prior