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1301.0 - Year Book Australia, 2008  
Previous ISSUE Released at 11:30 AM (CANBERRA TIME) 07/02/2008   
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Contents >> Financial system >> Money and the payments system

MONEY AND THE PAYMENTS SYSTEM

The payments system supports trade and commerce in a market economy. Notes and coin are one means of payment. Liquid balances held at financial institutions are also available potentially for transactions needs, under cheque and other forms of transfer facilities, and thus add to the money supply.

From 1 July 1998, a new financial regulatory framework came into effect, in response to the recommendations of the Financial System Inquiry. Under these arrangements the Reserve Bank has stronger regulatory powers in the payments system in accordance with the Payments Systems (Regulations) Act 1998 (Cwlth), to be exercised by a Payments System Board within the Bank.


Money

Australia has a decimal system of currency, the unit being the dollar, which is divided into 100 cents. Australian notes are issued in the denominations of $5, $10, $20, $50 and $100 and coins in the denominations of 5c, 10c, 20c, 50c, $1 and $2. $1 and $2 notes were replaced by coins in 1984 and 1988 respectively, and 1c and 2c coins ceased to be issued from 1 February 1992. Table 27.30 shows the value of notes on issue on the last Wednesday in June. Table 27.31 shows the value of coin on issue at the same time points. More recent information may be found on the Reserve Bank of Australia website (<http://www.rba.gov.au/CurrencyNotes/>).

27.30 VALUE OF AUSTRALIAN NOTES ON ISSUE - Last Wednesday in June

2004
2005
2006
$m
$m
$m

$5
533
539
572
$10
791
837
857
$20
2 533
2 584
2 690
$50
15 941
16 740
18 044
$100
14 224
14 924
15 903
Total
34 022
35 624
38 066

Source: Reserve Bank of Australia.
Note: $2 notes on issue have been written off by the Reserve Bank of Australia.

27.31 VALUE OF AUSTRALIAN DECIMAL COIN ON ISSUE - Last Wednesday in June

2004
2005
2006
$m
$m
$m

1c
22
22
22
2c
29
29
29
5c
154
163
174
10c
147
158
171
20c
210
226
245
50c
302
319
340
$1
531
557
576
$2
832
893
962
Total
2 227
2 368
2 518

Source: Reserve Bank of Australia.



Money supply measures

The money supply, as measured and published by the Reserve Bank, refers to the amount of cash held by the public plus deposits with specified financial institutions. The measures range from the narrowest category, money base, through to the widest category, broad money, with other measures in between. The measures mainly used are as follows:

Money base - comprises holdings of notes and coin by the private sector, deposits of banks with the Reserve Bank, and other Reserve Bank liabilities to the private sector.

M3 - is defined as currency plus bank deposits of the private non-bank sector.

Broad money - is defined as M3 plus borrowings from the private sector by non-bank financial intermediaries (including cash management trusts) less their holdings of currency and bank deposits.

The money supply under each of these measures at 30 June is shown in table 27.32.

27.32 MONEY SUPPLY MEASURES - 30 June

2005
2006
2007
$m
$m
$m

Money base
38 678
41 278
43 735
M3
678 360
747 280
867 883
Broad money
764 467
841 183
961 046

Source: Reserve Bank of Australia.



Payments system

Following recommendations by the Financial System Inquiry, the Payments System Board was established within the Reserve Bank in July 1998. The Payments System Board has responsibility for determining the Reserve Bank’s payments system policy, under the powers set out under the Payment Systems (Regulation) Act 1998 (Cwlth) and the Payment Systems and Netting Act 1998 (Cwlth). The Reserve Bank also has responsibility for oversight of the stability of clearing and settlement facilities under the Corporations Act 2001 (Cwlth).

The payments system in Australia has changed significantly in recent years. In part, this has been a response to technological change and consumer behaviour. On average, there are at least 13 million non-cash payments made in Australia each day, the overwhelming majority of which are electronic payments.

Cheques account for 11% of the number of non-cash payments, 52% are debit and credit card payments, with the remaining 37% made up by direct debits and credits.

Table 27.33 shows the number of points of access to the payments system. Branches are access points staffed by employees of financial institutions. Agencies are staffed by other than employees of financial institutions such as postmasters or storekeepers, and exclude school agencies and Bank@Post agencies. Bank@Post (previously called giroPost) provides a limited range of services at Australia Post offices on behalf of participating financial institutions. Electronic points of access include ATM and electronic funds transfer at point of sale (EFTPOS) terminals. More recent information may be found on the Australian Prudential Regulation Authority website
(<http://www.apra.gov.au/Statistics/Points-of-Presence.cfm>).

27.33 POINTS OF ACCESS TO THE AUSTRALIAN PAYMENTS SYSTEM - 30 June

2005
2006
2007

Branches
Banks
4 960
4 853
nya
Building societies and credit unions
1 235
1 170
nya
Bank@Post (giroPost)
3 190
3 188
nya
ATMs
24 173
24 616
25 681
EFTPOS terminals
518 532
540 189
597 063

nya not yet available
Source: Australian Prudential Regulation Authority; Australian Payments Clearing Association Limited.


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