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1301.0 - Year Book Australia, 2005  
Previous ISSUE Released at 11:30 AM (CANBERRA TIME) 21/01/2005   
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Contents >> Financial 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 26.33 shows the value of notes on issue on the past Wednesday of June in the past three years. Table 26.34 shows the value of coin on issue at the same points of time.


26.33 VALUE OF AUSTRALIAN NOTES ON ISSUE

Last Wednesday in June

Units
2002
2003
2004

$2
$m
45
45
-
$5
$m
530
515
533
$10
$m
802
762
791
$20
$m
2,801
2,514
2,533
$50
$m
14,718
14,918
15,941
$100
$m
13,057
13,406
14,224
Total
$m
31,954
32,161
34,022
Increase
%
18.6
0.7
5.8

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

Source: Reserve Bank of Australia.


26.34 VALUE OF AUSTRALIAN DECIMAL COIN ON ISSUE

Last Wednesday in June

Units
2002
2003
2004

1c
$m
22
22
22
2c
$m
29
29
29
5c
$m
143
148
154
10c
$m
135
140
147
20c
$m
198
203
210
50c
$m
281
290
302
$1
$m
483
506
531
$2
$m
748
796
832
Total
$m
2,039
2,134
2,227
Increase
%
15.6
4.6
4.4

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 for the past three years is shown in table 26.35.


26.35 MONEY SUPPLY MEASURES - 30 June

Units
2002
2003(a)
2004

Money base
$m
34,936
35,115
37,194
M3
$m
472,758
535,202
583,845
Broad money
$m
545,781
599,741
653,652
Percentage change(b)
%
5.4
9.9
9.8

(a) Series break due to other changes in bank reporting.
(b) Of broad money, over level at end of preceding June.

Source: Reserve Bank of Australia.


Payments system

Following recommendations by the Financial System Inquiry, the Payments System Board was established within the Reserve Bank on 1 July 1998. The Payments System Board has responsibility for determining the Reserve Bank's payments system policy, under the powers set out in the Payments Systems (Regulation) Act 1998 (Cwlth). The payments system has components for settling large amounts, and components for settling retail amounts.

The High Value Clearing System (HVCS) was implemented in August 1997. The HVCS allows all holders of Reserve Bank exchange settlement accounts to settle large value payments through a system designed to process a high volume of transactions. On 1 March 1999 the Payments System Board announced easing of restrictions on eligibility for holding exchange settlement accounts. APRA-supervised institutions and some institutions not supervised by APRA potentially now have access.

Initially, the settlement of payments was on a net deferred basis, where settlement of interbank obligations was not completed until 9 am on the day following the sending of payment instructions. This was changed to a real-time gross settlement basis on 22 June 1998. This new settlement basis, where payments are settled immediately, contributes substantially to the reduction of settlement risk and systemic risk in the Australian payments system.

About 75% of the value exchanged in the payments system is cleared via the HVCS.

Table 26.36 shows the number of points of access to the payments system. Branches are access points staffed by employees of financial institutions. Face-to-face other points of presence are staffed by other than employees of financial institutions such as postmasters or storekeepers, and exclude school agencies and giroPost agencies. 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.


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

2002
2003
2004

Branches
Banks
4,843
4,858
n.y.a.
Building societies and credit unions
1,270
1,247
n.y.a.
Other points of presence
Banks
Face-to-face
2,775
2,810
n.y.a.
Other(a)
916
880
n.y.a.
Building societies and credit unions
Face-to-face
562
857
n.y.a.
Other(a)
29
33
n.y.a.
giroPost
2,962
2,990
3,089
ATM(b)
16,398
20,339
21,550
EFTPOS terminals(b)
415,167
433,640
465,754

(a) Excludes giroPost, ATM's and EFTPOS terminals.
(b) As defined by the Australian Payments Clearing Association.

Source: APRA; Australian Payments Clearing Association Limited.


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