grant spencer : reserve bank perspective on payments speech by mr grant spencer, deputy governor of the reserve bank of new zealand, to the payments new zealand conference, auckland, 11 november 2014. * * * thanks to payments new zealand ( pnz ) for the invitation to speak this morning. i would like to congratulate pnz for again bringing together such a wide group of people with interest and expertise in payments matters. the ability to make payments conveniently and safely is vital to the functioning of the financial system and broader economy. the reserve bank therefore has a natural interest in the evolution and safety of the new zealand payment system. the bank plays three roles with respect to payment systems : • as a central bank, we are a payment system user. like any other financial institution, we use various payment systems to settle a range of transactions. • the reserve bank is also a provider of payment and settlement services. our role as the supplier of currency is widely known and notes and coins are still used to make a significant proportion of retail payments. we are also the operators of the exchange settlement account system ( esas ) and the securities depository and settlement system, nzclear. we are currently undertaking a strategic review of these two systems and will be releasing a progress report this week. but this is not my topic today. • the bank ’ s third role, undertaken jointly with the financial markets authority ( fma ), is the regulatory oversight of payment and settlement systems. in our broader capacity as financial system regulator we are conscious of the crucial role that the payment system plays in promoting a sound and efficient financial system. today i will focus on this regulatory role, which i have responsibility for within the bank. i will discuss recent changes in the payments landscape, some of the opportunities and risks that those changes present, and how the industry is responding to those risks. i will also talk about the role that i see for the reserve bank in influencing payment system developments. the fast - changing world of payments in retail payments, we are seeing rapid innovation, increasing technological complexity, and a breakdown of traditional boundaries between banking, telecommunications and it functions. it was just 30 years ago that payments were overwhelmingly made using cash and cheques. while these instruments continue to play an important role, most payments these days are made using electronic debit, credit and payment cards. figure 1. highlights the steady growth in cards transactions that has continued unabated over the past 10 years. bis central bankers ’ speeches figure 1

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