The Real-Time- Payments Committee is on a mission. It has promised to deliver a proposal for new payments infrastructure to the Payments System Board at the Reserve Bank by the end of 2012, so that requirements, design and build can begin in earnest in 2013. The last time the industry did anything like this was in the early 90’s, when financial institutions worked with the Reserve Bank to set up the new infrastructure for high value payments in Australia: The Reserve Bank Information and Transfer System (RITS) and its feeder system, the High Value Clearing System.
In September of this year, Peter Mair’s submission to the RBA Innovation Review Conclusions created a surprising media splash. Mr Mair, a former RBA official and current finance media commentator, suggested significant and widespread hoarding of $50 and $100 banknotes by older Australians. In the media frenzy that followed, Mr Mair further suggested that “the average pensioner couple could hold up to $50,000 in undeclared $50 and $100 notes to get access to the pension.”
Not surprisingly, these comments set off a media firestorm. The Minister of Finance Penny Wong commented, responding, somewhat tongue in cheek, that she hadn’t been looking under any pensioner’s bed for cash!
The coverage raises the issue of high denomination banknotes in Australia. Are we awash in high denomination banknotes in Australia? Is Australia out of line with its international peers? Where are all those $100 notes and what are they being used for?