geoff bascand : brighter money – enhancing innovation and embracing heritage speech by mr geoff bascand, deputy governor and head of operations of the reserve bank of new zealand, at the launch of brighter money, wellington, 20 november 2014. * * * seeing people ’ s initial reactions to the new banknote designs is a heartening reminder of what an important role currency plays in our lives, and what a sense of pride and heritage our notes evoke. three years ago, when we launched the project to upgrade new zealand ’ s banknotes, we decided to retain representation of well - known new zealanders and flora and fauna on our notes. our research showed that new zealanders were satisfied with the themes of the existing notes and the denominations available. looking at the designs in print, we ’ re very proud of the way new zealand ’ s rich cultural diversity, world - class achievements and unique heritage have been brought to life as part of the new designs. from our world famous mountaineer and explorer sir edmund hillary, through to our nobel prize winning scientist lord rutherford, the stories that we ’ ve celebrated as new zealanders will continue to live on through future generations. some new ones may even emerge as the sharper and more colourful pictures on the notes bring flora, fauna, landscapes and history alive. but our brighter money doesn ’ t just celebrate innovation and the pioneering new zealand spirit through the images depicted on the banknotes – the notes themselves are at the forefront of banknote technology. it ’ s been 15 years since the current new zealand banknotes were last upgraded, and printing and design techniques have advanced significantly. in 1999, new zealand was one of the few countries to be printing banknotes on polymer – now, it ’ s increasingly common as central banks around the world work to produce durable, secure currency. security features have also advanced considerably in the last 15 years, and our new notes contain more sophisticated security elements that greatly enhance the overall design. the transparent windows are larger, and striking holographic features will help to make the notes very easy to verify, but hard to counterfeit. more details about these features will be made available closer to the time the notes are released. new zealand is very fortunate, in that we have low rates of counterfeiting by international standards. but since the last banknote upgrade in 1999, there have been significant advances in copying, scanning, and printing technologies and the cost of this technology has reduced. as a result, the economics of counter

and ourselves foresee that the official cash rate will not need to rise as far in this cycle as it did in the last one. there are a number of reasons for this, none of them individually definitive, but all pointing in the same direction : in brief the financial markets have already effectively tightened conditions as a result of more costly funding ; the new zealand private sector is reducing debt and cautious about new borrowing ; most borrowers are on shorter duration mortgages and the steeper yield curve does not much encourage lengthening this ; increasing policy rates in the shadow of australia should be easier than being a world leader ; and, finally, we believe there may be alternative ways of influencing over - exuberant bank lending through macrofinancial policies. our economic recovery is out of its first stage of intense fragility, and into a new phase of rebalancing growth. but a final caution : recovery so far has been full of surprises. there will be more to come!