decade of the century, but has fallen by around 10 % since then. and there have been even more significant changes in the volume of cash payments. in the latest data, the total number of cash payments fell 16 % over two years. it looks likely that last year, for the first time, the number of card payments overtook cash payments. the driver of these changes is the increasing use of private bank money rather than publicly issued cash for small payments through cards, the internet and new e money providers. it is difficult to predict how far or how fast this shift will go. cash remains hugely important for payments in the economy. it is still used to settle nearly half of the transactions in the uk. although the cost of card and smartphone transactions has come down, cash remains materially the cheapest technology for small transactions. estimates suggest that cash transactions cost retailers less than 1½ pence per transaction, or 0. 15 % of the value, compared to over 5 pence per transaction for debit cards 0. 24 % by value. and, behaviourally, many people in the economy clearly prefer to use it for a variety of reasons. that could change quickly, as it has done in one or two countries, such as sweden. but in many others the use of cash has proved extremely stable. for example, in spain and italy cash is still used for over 80 % of transactions at the point of sale. given our general responsibility for money in the uk, what do these changes in the way money is used as a means of payment mean for the bank of england? our responsibility is to ensure that people can use the money of the uk to transact safely and, subject to that, as efficiently as possible and in line with their preferences. total sterling notes and coins in circulation, excluding backing assets for commercial banknote issue in scotland and northern ireland, seasonally adjusted. statistics from payments uk ( now part of uk finance ) show that the value of cash payments were between £260bn and £270bn in each year from 2001 - 2010 but has fallen over recent years to £240bn in 2016. from 18. 2bn payments in 2014 to 15. 4bn in 2016 ( payments uk ). ecb use of cash in households in euro area survey all speeches are available online at www. bankofengland. co. uk / speeches the bank of england has been very clear that it will issue cash to meet demand, as it has always done. our investment in

are not able to simply pass on the higher cost of deposits to borrowers. as a result, in the scenario there is a marked squeeze in banks ’ net interest margins and hence on banks ’ revenues. the scenario also poses a number of risks to banks ’ market share, to the liquidity of retail deposits, to fees from payment services and to the ability to retain and access customers and to the use of their current data advantage to cross sell products. if firms are depending more on technology like the cloud and third party providers, this environment could also pose cyber and operational risks. the impacts are not of course all one - way. there is an upside for existing banks. new technology and customer relationships gives them the opportunity to provide customers with new and better products and services, to compete and, crucially, to become more efficient. all speeches are available online at www. bankofengland. co. uk / speeches in their responses, the banks in the test judged they could maintain existing business models without increasing overall risk taking, meeting the requirements of both regulators and investors, and using technology to increase efficiency to offset lower margins. our assessment was that there were a number of risks to the banks ’ projections in the exploratory scenario. in particular, open banking, psd2 and other related changes might cause greater and faster disruption to business models and the forecast increases in efficiency may be more difficult to deliver than assumed. investors might also demand a higher return than banks ’ forecast in the exercise. the bank of england ’ s 2017 exploratory scenario was not a pass or fail stress test. it was an exercise designed to assess the level and depth of banks strategic thinking about responses to future challenges, including the challenges to core business models from changes underway in the technologies around money. the exercise provided the financial stability and the prudential regulation committees of the bank of england with a number of important insights. we will be following up with banks on the results of the exploratory exercise. conclusion thinking about the future in this way is a key part of our responsibility for the money of the uk. the way we use the social technology of money has a long and very varied history. money has manifested itself in very different forms over the centuries. the confidence that lies at the heart of the technology that is money has been supported in very different ways. the technology has, on occasion, been abused and misused : to borrow mill ’ s analogy, the ‘ machine ’ has