‘s most powerful banker has warned the future of cash is in jeopardy because it’s expensive to distribute banknotes – and strongly hinted King Charles won’t feature on the new $5 note.
Michele Bullock issued a bleak picture of cash distribution during her first appearance before a parliamentary committee as Reserve Bank of Governor.
‘As the use of cash for transactions has declined, the economics of cash distribution has come under pressure,’ she said on Friday morning.
‘This was one of the main factors behind the merger of the two largest cash-in-transit providers last year.’
Michele Bullock issued a bleak picture of cash distribution during her first appearance before a parliamentary committee as RBA Governor
Armaguard and Prosegur last year gained regulatory approval to merge, giving the new company Linfox Armaguard a 90 per cent share of ‘s cash-in-transit market.
The Reserve Bank of has warned borrowers could face another interest rate hike even though inflation has fallen to a two-year low.
Governor Michele Bullock and her monetary policy board left the cash rate on hold at a 12-year high of 4.35 per cent on Tuesday afternoon. But she has scotched any suggestion of an interest rate cut soon
This was based on a promise to the n Competition and Consumer Commission that it would continue to deliver cash until 2026.
‘Linfox Armaguard has since indicated that despite this, its cash distribution business remains unsustainable,’ Ms Bullock said.
‘The RBA places a high priority on the n community having good access to cash withdrawal and deposits.’
Before the merger, Armaguard had distribution agreements with Commonwealth Bank, ANZ and NAB, while Prosegur, a Spanish company, had a deal with Westpac.
Ms Bullock told the House of Representatives economics committee on Friday she would continue meeting with cash distribution industry leaders – urging them to put the public need for cash ahead of their own commercial interests.
‘These discussions are likely to continue for some months,’ she said.
‘In developing a model for cash distribution that’s sustainable in the long term, it’s going to require addressing some very complex issues and it’s going to take some time to work through.
‘So I’ve encouraged the major participants in the cash distribution system to approach these issues with a public interest in mind rather than just their own, narrow business interests.’
The new $5 banknote
Ms Bullock also revealed the RBA, which owns polymer banknote manufacturer Note Printing , has been consulting with Aboriginal groups on the design of the new $5 note, following the death of the Queen in 2022.
‘Finally, I would just like to update the committee on work underway to redesign the $5 note,’ she said.
‘Last year we announced that we’d be taking the opportunity to feature a new design on the $5 note that honours and celebrates the culture and history of First Nations people.
‘In recent weeks, we’ve also begun visiting First Nations community organisations in key regional and remote locations across and the Torres Strait.’
Treasurer Jim Chalmers a year ago announced King Charles won’t be featuring as ‘s head of state, like his mother did as the monarch.
The n public are being consulted in March and April, which would see the Queen disappear from the $5 note for the first time since 1992 when she replaced humanitarian Caroline Chisholm.
‘As a first step in determining the design, we will be asking members of the public over the course of March and April to share with us what they think should be on our $5 banknote to represent First Nations culture and history in ,’ Ms Bullock said.
‘We’re doing that to engage with local communities about the theme nomination.’
This is occurring despite ns using cash less often, even for small transactions with the RBA’s own data showing 73 per cent of payments under $10 in 2022 were done with a card, compared with little more than half in 2019
During the last financial year, 718 automatic teller machines were removed, n Prudential Regulation Authority figures showed.
This occurred as 424 bank branches closed in the year to June 2023.
Ms Bullock also revealed the RBA, which owns polymer banknote manufacturer Note Printing , would be consulting with Indigenous groups on the design of the new $5 note, following the death of the Queen in 2022
Armaguard and Prosegur last year gained regulatory approval to merge, giving the new company Linfox Armaguard a 90 per cent share of ‘s cash-in-transit market
The number of branches has plunged by more than a third or 37 per cent since June 2017, but in six years, the number of ATMs has plummeted by 59 per cent.
has 5,693 ATMs still in existence – less than half the 13,814 level of June 2017.
The number of bank branches has fallen to 3,588, down from 5,694.
This has also coincided with cash making up 16 per cent of in-person transactions in 2022, down from 32 per cent in 2019 before the pandemic, Reserve Bank data showed.
Interest rates could still rise
The Reserve Bank this week left interest rates on hold at 12-year high of 4.35 per cent but Ms Bullock told the parliamentary hearing on Friday interest rates could still increase.
‘We are committed and the board is committed to getting inflation back down,’ she said.
‘It’s important that people understand that we will do what we need to do to get it back down because the alternative is bad for everyone.’
That’s despite rates going up in November for the 13th time in 18 months, marking the most aggressive pace of monetary policy tightening since 1989.
Inflation last year fell to a two-year low of 4.1 per cent but it’s not expected to return to the top of the RBA’s 2 to 3 per cent target until late 2025.
That would have meant four years of inflation being outside the target band that has been in place since the early 1990s.