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1301.0 - Year Book Australia, 2009–10  
Previous ISSUE Released at 11:30 AM (CANBERRA TIME) 04/06/2010   
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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 (Wallis Committee). 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 of June. More recent information may be found on the Reserve Bank of Australia website (<http://www.rba.gov.au/banknotes/resources/statistics.html/>). Table 27.31 shows the value of coin on issue, for more information see the Royal Australian Mint website (<http://www.ramint.gov.au/about/compliance/annualreports/2008-09/06_appendices.cfm#a>).

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

2005
2006
2007
2008
2009
$m
$m
$m
$m
$m

$5
539
572
591
614
644
$10
837
857
894
917
954
$20
2 584
2 690
2 846
2 732
2 651
$50
16 740
18 044
19 228
20 111
23 721
$100
14 924
15 903
16 730
17 690
20 117
Total
35 624
38 066
40 289
42 064
48 087

Source: Reserve Bank of Australia.

27.31 VALUE OF AUSTRALIAN DECIMAL COIN ON ISSUE - 30 June

2005
2006
2007
2008
2009
$m
$m
$m
$m
$m

1c
31
31
31
31
31
2c
48
48
48
48
48
5c
163
174
181
186
192
10c
158
170
180
188
195
20c
247
265
278
292
308
50c
344
368
384
399
414
$1
622
653
682
723
754
$2
889
962
1 028
1 113
1 204
Total
2 502
2 671
2 812
2 980
3 146

Source: Royal Australian Mint.



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
2008
2009
$m
$m
$m
$m
$m

Money base
38 678
41 278
43 735
46 466
53 388
M3
678 465
747 315
869 457
1 035 569
1 178 302
Broad money
764 572
841 217
963 995
1 121 140
1 246 438

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 15 million non-cash payments made in Australia each day, the overwhelming majority of which are electronic payments.

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
2008
2009

Branches
Banks
4 960
4 853
5 264
5 398
5 504
Building societies and credit unions
1 235
1 170
1 263
1 240
1 172
Bank@Post (giroPost)
3 190
3 188
3 301
3 305
3 302
ATMs
23 472
24 616
25 681
25 658
27 108
EFTPOS terminals
518 532
540 189
597 063
658 033
669 165

Source: Australian Prudential Regulation Authority; Australian Payments Clearing Association Limited.



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