currency union ” in the balance of my comments, while recognising that for all practical purposes we are talking about “ dollarisation ”, be it “ australian dollarisation ” or “ us dollarisation ”. some myths about currency union before i comment on some of the economic advantages and disadvantages of currency union, it might be helpful to dispose of a few of the myths that have become rather prevalent. the first myth is that the reserve bank is opposed to currency union, perhaps because “ don brash would lose his job ”. certainly, if we “ dollarised ”, using either the australian dollar or the us dollar, there would be no need for anybody to be employed by the reserve bank of new zealand and those now employed by the bank would lose their jobs. if we went into a currency union, presumably with australia, it is also likely that many existing reserve bank staff would lose their jobs ( though i must admit that the european precedent perhaps suggests that job losses would not be great in that situation! ). but i can assure you that neither the reserve bank nor don brash is opposed to currency union. nor are we promoting currency union. as indicated a moment ago, the bank ’ s responsibility is to advise ministers about the economic implications of currency union, both the pros and the cons, and to foster informed public discussion on the issue. the second myth is that small countries are in some ways just too vulnerable to have their own currencies in the modern world. this is sometimes expressed in terms of the metaphor of a tiny rowing boat, tossed around in a turbulent ocean, with the turbulence arising from the vast flows of capital which every day wash backwards and forwards at the click of a mouse. but there are some extremely successful small countries with their own currencies - singapore and switzerland spring immediately to mind - and, contrary to popular mythology, the new zealand dollar is not a particularly volatile currency. not a particularly volatile currency? no. the reserve bank has looked at this issue both in terms of short - term volatility and in terms of the big exchange rate swings which are, i suspect, of rather greater concern. looking at short - term volatility ( measured as 30 day volatility against the united states dollar ), the new zealand dollar was more volatile than the australian dollar, the british pound, the japanese yen, and the german mark between the time of the float in march 1985 and august 1988. but for most of the period

grant spencer : innovation with resilience – a central banker's perspective speech by mr grant spencer, deputy governor of the reserve bank of new zealand, to the payments nz conference, auckland, 8 november 2016. * * * thanks to payments nz for inviting me to speak again at your impressive conference. this is a great forum for all involved in the new zealand payments sector. i will give you a central banker ’ s perspective. my theme is innovation with resilience. we are seeing a huge amount of innovation in the payments industry. since the last conference in 2014, the rapid pace of change has continued, driven by factors such as customer demands, changing technology, new players, and also regulatory changes. a challenge is to ensure that our systems remain resilient through this change. the reserve bank is a system operator and the regulator. we want to be responsive on both fronts. as operator we are upgrading the exchange settlement account system ( esas ) and nzclear systems to ensure they remain fit for purpose. as regulator we are developing an enhanced framework for oversight of new zealand ’ s financial market infrastructures ( fmis ). today, i will talk about some of the drivers of change, the many risks we face and the proposed new oversight framework. drivers of change the payments landscape is changing dramatically as it experiences ‘ digital disruption ’ 1. customers are now seeking to make and receive payments in real time, from any location, on any device, and at any time. these customers expect payment services to be faster, more personalised, easy to use, inexpensive and fully secure. the rise in customer expectations is being met and expanded by new providers attracted to the payments industry. we have seen the telecommunications and computing industries merging with the financial industry to provide innovative financial services, including payments services. much of the innovation in the sector is building on existing technology platforms that are getting faster and smarter. for example, the ibm “ deep blue ” supercomputer that you may recall beat gary kasparov back in 1997, is less powerful than the iphone that we carry in our pocket. many of the new developments are taking place in the retail payments space — banks are introducing new services such as mobile and contactless payments, and engaging with new market players such as apple pay, amazon and alipay. for example, anz ’ s recent partnership with apple pay. banks are having to make crucial decisions about how best to respond in the new payments environment. we are also