tangible link to the people – making it a key branding tool. trust and confidence in the central bank are crucial for us to effectively deliver our mandate. this dynamic is augmented in jurisdictions like malaysia, where the central bank is responsible for promoting both monetary and financial stability. if we were to go completely cashless, central banks might lose this traditional means of maintaining a strong brand. the policy calibration in malaysia at present, malaysians still transact mostly via cash. while malaysia endeavours to accelerate the migration to e - payments, we see that cash is necessary and will always be in demand. although e - payments per capita nearly doubled in the past five years, the ratio of cash in circulation to gdp rose by 17 %. we are therefore committed to ongoing enhancements in the way we manage cash and its circulation. to this end, we have invested in a new automated cash centre, which most of you will be visiting as part of this conference. we are also in the process of building a new modern mint. 3 / 4 bis central bankers'speeches the next page for physical currency as we consider the future of physical currency, it is crucial that we bear in mind the sensitivities of the users of cash. we live in an increasingly aware and empowered generation. for this reason, issues of environmental footprint cannot be an afterthought. similarly, banknote production must carefully consider the public interest and legitimate ethical concerns across society – including special interest groups. in addition, the industry must be run with manifest integrity. the banknote ethics initiative is a welcome step forward in this regard. the industry will also benefit from continued and candid engagement with central banks, who understand the nuances of their respective populations. we also cannot ignore the fact that the idea of a cashless utopia is becoming more popular. this will be a real challenge for us – as we hope to see physical currency remain relevant. the sustainability and competitiveness of this industry depends on being able to deliver on the three considerations i mentioned earlier – namely, ensuring that cash continues to be secure, socially and economically cost - effective, and enabling for the promotion of monetary and financial stability. with that, i would like to wish all of you a productive conference as you discuss these important issues in the coming days. have a pleasant stay in malaysia, enjoy yourselves, and please do not hesitate to indulge in some shopping – we do accept cash! 4 / 4 bis central bankers'speeches

economy – a cost borne by society as a whole. a 2005 study estimated this figure to be usd100 billion annually in the united states alone the task of calculating the relative total cost of cash and cashless payments is a difficult one. apart from the methodological challenges, the findings for each study are also likely to differ according to the nuances of each country. nonetheless it is a worthwhile endeavour. policy makers around the world have made positive progress in this area, and i believe we will see more efforts on this front in the coming years. this leads to another dimension of the social cost consideration, which is the impact on financial inclusion. millions of people live in rural areas globally, with little or no access to the modern infrastructures necessary to facilitate cashless solutions. the availability of cash is therefore paramount in ensuring that they continue to be seamlessly included in the financial system. at the same time, the success of mobile payments operator m - pesa in rural kenya has demonstrated that cashless alternatives can in fact be a means to promote financial inclusion for the unbanked. here in malaysia, where mobile banking transactions have tripled in the past year, there is potential to leverage the high mobile penetration rate to improve financial inclusion. stability the third element is stability. the ability to make retail payments reliable is crucial for the effectiveness of the financial system. as discussed earlier, we have come a long way in developing a reliable way of transacting electronically – through solutions such as credit cards, mobile transfers and prepaid balances. central banks are now carefully monitoring newer developments, particularly digital currencies based on the use of a distributed ledger. digital currencies have tended to be volatile and subject to speculative hoarding. this raises the potential for runs on the digital currency, triggered for instance by a loss of confidence in the currency itself or a third party provider like an exchange. this risk is likely to be augmented where the digital currency is not backed by an issuer, and where there is no lender of last resort function. if digital currencies are widely used, such a shock could have systemic repercussions. at the same time, some of these concerns may be addressed if the digital currencies used are issued by a central bank. many policymakers are studying this option. in addition to facilitating payments, cash has been a powerful instrument for central banks to build trust and credibility with the public. the notes issued by central banks provide us with a direct and