singapore. typically, 90 per cent or more of the high - denomination notes withdrawn from banks are redeposited within the month. during the initial months of the 2008 crisis, only 70 per cent of the $ 100, $ 1, 000 and $ 10, 000 notes withdrawn were returned. this phenomenon is insightful. the safety and soundness of banks in singapore was never in question, and the impact of the crisis on singapore ’ s financial system was minimal. but there was a discernible effect on consumer behaviour – people preferred to keep more cash in a climate of heightened uncertainty. the bottom line? reports of the demise of cash are vastly exaggerated. notes and coins have been with us a long time, and have served a crucial role in the growth of the modern economy. i suspect they will be with us for quite some time more. bis central bankers ’ speeches three “ c ” s of a good payment instrument but be it physical cash or electronic payment, the medium of exchange for transactions must satisfy three requirements. i will refer to these as the three “ c ” s of a preferred payment system – confidence, convenience, and cost - effectiveness. first, confidence. businesses and consumers must be assured of the security of payment instruments. the widespread circulation of counterfeit notes and coins can impair confidence in a country ’ s currency. as john maynard keynes put it nearly a century ago, quoting lenin, “ there is no subtler, no surer means of overturning the existing basis of society than to debauch the currency. ” keynes was, of course, talking about the deleterious effects of inflation. but it applies just as well to debasing the currency through counterfeiting. ensuring the fidelity of notes and coins and the soundness of electronic payments is therefore a critical function. central banks and currency issuing authorities must continually innovate and stay ahead of fraudsters. in electronic fund transfers, we have instituted more end - to - end security measures like two - factor authentication. modern currency notes come with very advanced security features. i wanted to give some examples, but have been advised that it would be tantamount to giving away our secrets! confidence in a currency comes not only from its security but also its availability, especially during times of uncertainty. central banks and financial institutions must have robust business continuity measures to ensure adequate supply of cash to meet surges in demand and the resilience of national payment systems. the second “ c ” is

country. foreign financial institutions become risk averse, and withdraw. this time, large banks in the developed countries have certainly also become risk averse. but there is also the important factor that their own balance sheets have been severely impaired, and so, risk aversion aside, they have little capacity to lend. in other words, a key factor for capital withdrawal this time is banks in the developed source countries pulling back to hunker down for their survival. emerging economies, many with sound fundamentals, are suffering the collateral damage. this comes after years of rapid growth fuelled by yield - hungry foreign capital. for these reasons, the transmission of the shocks in the us and europe to the rest of the world has been swift and sharp. indeed there have been many comparisons to the great depression. yet, compared to the 1930s, an importance difference today is that news spread across the globe far more rapidly. even rural households in china and india can now access this stream of bad news, real - time, through satellite televisions and the internet. the hyperefficiency of information flows has in itself introduced new uncertainties as sentiment shifts rapidly and abrupt loss of confidence becomes self - reinforcing. crisis response : decisive action needed how do we deal with this crisis? despite its scale and unprecedented nature, it may be instructive to study the pattern of responses in previous crises. in past crises, the responses typically go through several overlapping phases. initially, there is a lack of appreciation of the scale and severity of the problem. this then gives way to fear and panic as the problem becomes stark. next, anger sets in, and a hunt for culprits begins. as the financial and economic stresses take root, pessimism sets in. if remedial actions are seen to be tentative and lacking in conviction, recovery is delayed and interrupted by bouts of renewed panic. it may take some time before the hard realities are accepted, and a level - headed search for viable solutions sets the path for recovery. elements of these have been played out in the current crisis. initially, the " subprime " issue was regarded as a manageable problem, confined to a small segment of the us housing market. then it triggered seizure in the wider credit markets. after months of turbulence, the hope was that markets would unclog and financial institutions would be quite unscathed by the credit losses and liquidity strains. when it became clear that this script was wrong, the