emergency offline backup payments, and privacy and autonomy in savings and payments. these benefits of cash have so far been not well replicated by electronic money in commercial banks. figure 1 : new zealanders ’ use of cash ‘ over the last seven days ’ is declining share of survey respondents 50 % 40 % 30 % 20 % 10 % 0 % no response more than 20 11 - 20 7 – 10 3 – 6 1 - 2 not at all never use cash - 10 % change source : reserve bank ( 2019b ). cash and covid - 19 covid - 19 has also highlighted the important role that cash plays in times of economic uncertainty. during the weeks leading up to the march 25 pandemic lockdown, new zealanders demanded an unprecedented amount of cash, with $ 800m of bank notes issued in march alone ( compared to $ 150m in march 2019 ). these bank notes have not yet returned to the banking system, meaning they are likely still being held by the public. since then, cash in circulation has continued to increase, growing by about 15 percent year on year during the second quarter of 2020. many other countries have also experienced increased demand for bank notes during the pandemic, as a store of value and a back up method of payment ( figure 2 ). 7 it is not unusual for cash holdings to increase during periods of uncertainty. in the lead up to the year 2000 wide - spread uncertainty of potential computing failures ( the so - called “ y2k bug ” ) resulted in a sharp increase in cash in circulation ( quarterly ). similarly, economic uncertainty during the financial crisis over 2008 - 2009 resulted in a rise in cash in circulation ( figure 2 ). smaller increases in cash holdings can also be seen with regional events such as the 2011 canterbury earthquakes. 7 see also auer et. al. ( 2020 ). figure 2 : cash in circulation continues to increase quarterly year - on - year percentage growth 25 % 20 % 15 % 10 % 5 % 0 % - 5 % - 10 % - 15 % australia canada nz norway sweden q2 / 2020 q4 / 2018 q2 / 2017 q4 / 2015 q2 / 2014 q4 / 2012 q2 / 2011 q4 / 2009 q2 / 2008 q4 / 2006 q2 / 2005 q4 / 2003 q2 / 2002 q4 / 2000 q2 / 1999 - 20 % uk notes : grey lines denotes ( in order ) the year 2000 ( y2k ) period, great

tech and fintech firms are innovating with new types of payment instruments and methods. some firms and consortiums are proposing new ways of paying that rely on cryptoassets or so called ‘ stablecoins ’ 12 and distributed ledger technology. covid - 19 also accelerated existing trends towards contactless and remote payments. during the lockdown some retailers requested either contactless ‘ in - person ’ payment methods or remote payments via internet orders. cash was notably discouraged by many despite having similar viral transmission risks as other common objects such as plastic cards, handrails and door knobs. 13 new zealand was not alone in experiencing these trends. we are currently undertaking a public survey and wider research supporting analysis to determine how much our payment behaviours have changed during covid - 19 and whether this will be lasting. 12 crypto - assets are generally tokens that rely on cryptographic methods and non - traditional payment infrastructure to be transacted and stored. stablecoins is an industry term that refers to the issuer ’ s intention to stabilise the value of a crypto - asset relative to a certain asset ( s ) such as a fiat currency. the name stablecoin does not confirm its stability. 13 auer, cornelli and frost ( 2020 ). figure 5 : payments becoming increasingly digital selected countries cash in circulation ( % gdp ) jp ea sg us au se ca uk nz nk value of card payments ( % gdp ) notes : arrows denote 2007 – 2018 changes. source : cpmi red books, reserve bank of new zealand, norges bank. the reserve bank recognises the potential for transformative innovation in financial services ( “ fintech ” ) to increase efficiency and financial inclusion. 14 at the same time, innovations may create new risks that need to be managed or mitigated appropriately. 15 some of those risks include money - like proposals that sit outside of the regulated sector and are not reliably denominated in new zealand dollars. such innovations could pose challenges to our ability to set monetary policy. central bank digital currencies ( cbdcs ) among these trends, central banks around the world are exploring the benefits of and potential for retail cbdcs that are issued to the public ( figure 6 ). 16 cbdcs present a range of high - level benefits and challenges as previously described in our 2018 research. 17 in particular, cbdcs provide a digital form of legal tender money to the public and represent a claim on the central