are low relative to other jurisdictions, even taking account of the current sizeable fiscal stimulus. the https : / / www. rba. gov. au / speeches / 2020 / sp - dg - 2020 - 09 - 22. html 10 / 13 22 / 09 / 2020 the australian economy and monetary policy | speeches | rba increase in debt is definitely manageable. moreover, there is not, in my judgement, a trade - off between debt and supporting the australian economy in the current circumstance. absent the fiscal stimulus, the economy would be significantly weaker and debt levels even higher. this is particularly so with interest rates at their historically low levels, where the growth benefit from the fiscal stimulus will improve the debt dynamics and help service the debt in the future. foreign exchange intervention is another potential policy option. however, with the australian dollar broadly aligned with its fundamentals, it is not clear this would be effective in the current circumstances. the swiss experience over the past decade ( ahead of the introduction of the ceiling on the swiss franc ) illustrates the issues that can arise in terms of the effectiveness of foreign exchange intervention when a currency is not far from its fundamental value. it is also important to remember that the exchange rate is a relative price. part of the recent movements in the australian dollar reflects the depreciation of the us dollar against other major currencies. it also reflects the high price of iron ore i mentioned earlier. the relatively better growth outcomes in australia compared with other economies shown in graph 1 are having an influence too. that said, a lower exchange rate would definitely be beneficial for the australian economy, so we are continuing to watch developments in the foreign exchange market carefully. a third option is to lower the current structure of rates in the economy a little more without going into negative territory. the remuneration on es balances is currently 10 basis points, the three - year yield target is at 25 basis points and the borrowing rate of the tff is also 25 basis points. it is possible to further reduce these interest rates. a fourth option is negative rates. the governor has talked about this before. [ 11 ] i will just make a few points here. the empirical evidence on negative rates is mixed. [ 12 ] in the short - term, they can contribute to a lower exchange rate. in the medium term, the effectiveness can wane including through the effect on the financial system. negative rates can also encourage more saving as households look to preserve the value of their

malcolm edey : competition and regulation in the card payments market speech by mr malcolm edey, assistant governor ( financial system ) of the reserve bank of australia, at the 15th annual conference “ cards & payments australasia 2010 ”, sydney, 15 march 2010. * * * it ’ s a pleasure to join you today for this 15th annual conference of cards and payments australasia. as a newcomer to this event, i want to take the opportunity to talk about the economics of the card payments industry, how it differs from other markets, and also about the reserve bank ’ s approach to card payments regulation. card payments are an important part of the infrastructure of a modern economy. all of us here today, i ’ m sure, appreciate the convenience of being able to pay by plastic. more to the point, card payments account for a big slice of spending in the retail economy. there are currently roughly 40 million debit cards on issue in australia, and around 20 million credit and charge cards. on those cards, nearly 10 million transactions are made every day, with a daily value of around one billion dollars. to put this in some sort of perspective, the value of spending on personal cards is about half the size of household consumption. card payments are a big proportion of the number of non - cash payments in the economy, but only a small proportion of their value. more card payments are made in australia than the other main means of non - cash payments – that is, direct debits and credits, bpay and cheques – combined. and yet, in terms of value, they make up less than three per cent of the total. this illustrates that, while card payments have few implications for the overall stability of the financial system, they have significant implications for its efficiency. in this context, efficiency includes not just the efficiency of the processes by which payments are made, but also the way in which price signals function to allocate resources and guide decisions. the rba has a mandate to use its regulatory powers, where needed, to promote that broader efficiency goal through its payments system board. i ’ ll talk more about the board ’ s activities in a moment. but let me start with some observations about the economics. one of the first things i learned when i started to work on card payments is that the economics of this industry are not simple. in the simplest markets, we can think of supply and demand as being determined by a set of independent decisions made by producers and