Reserve Bank of Australia (RBA) Governor Michele Bullock has issued a stark warning that cash usage in Australia is in “long-term decline” and may only remain viable for another decade. Speaking at a parliamentary hearing in Canberra, Bullock emphasized that lower-income households and regional communities would be the most affected by the diminishing access to physical currency.
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She reassured Australians that the RBA remains committed to ensuring cash is accessible for as long as necessary, particularly during economic uncertainty. However, she acknowledged that rising costs associated with distributing cash, coupled with declining consumer demand, pose serious challenges for the financial system.
Cash Accessibility Becoming a Growing Concern
Bullock revealed that while cash usage is dwindling, the cost of keeping it in circulation is increasing. She dismissed the idea of passing costs onto consumers, noting that such a move would be widely unpopular. This follows recent controversies surrounding banks imposing fees on cash withdrawals, with Commonwealth Bank temporarily halting a planned $3 withdrawal fee in December.
With banks under pressure to keep cash available, the RBA is exploring ways to incentivize them to maintain cash reserves in communities that still rely on physical transactions.
The governor’s comments come as Australia’s largest cash-in-transit provider, Armaguard, received a $50 million emergency bailout from major banks to sustain operations until June. There are concerns that without further intervention, disruptions to cash distribution could become widespread.
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RBA’s Cautious Approach to Inflation and Rate Cuts
Beyond cash, Bullock also addressed inflation and interest rate movements, admitting that the RBA had been slow to react to surging inflation in recent years. While inflation has dropped significantly from its 2022 peak of 7.8% to 2.4% in late 2024, she cautioned against expecting rapid interest rate cuts.
The RBA made its first post-pandemic rate cut this week, reducing the cash rate by 25 basis points to 4.1%. Bullock signaled that while the central bank is closely monitoring inflation trends, future cuts will be made with extreme caution.
She highlighted that “lower-income renters” have been among the hardest hit by inflation, struggling with soaring housing costs and a cost-of-living crisis. Unlike mortgage holders, who benefit from rate cuts, renters see little direct relief from monetary policy adjustments.
RBA Dismisses Bitcoin as a Payment System
During the parliamentary session, Bullock also weighed in on cryptocurrencies, stating that Bitcoin and other digital currencies “do not serve the purpose of money.” She argued that Bitcoin lacks stability and efficiency compared to traditional payment systems and dismissed its role in Australia’s financial future.
Although the RBA does not regulate cryptocurrencies, Bullock suggested that regulatory oversight falls under ASIC and AUSTRAC’s domain. She noted that the Australian government may need to explore stricter licensing requirements for digital currency exchanges and stablecoins.
Uncertain Future for Interest Rates and Inflation Control
Despite the recent rate cut, Bullock warned mortgage holders against assuming a swift easing cycle, stating that financial markets were “too confident” in predicting multiple cuts in 2025 and 2026. She emphasized that inflation remains a threat and that premature rate reductions could “derail” Australia’s economic recovery.
With the next rate decision set for April 1—just weeks before the federal election—Bullock urged Australians to remain patient. “I understand you are hurting,” she said. “But if we don’t get inflation down, interest rates won’t come down either. We have to stay the course.”
As Australia navigates a complex economic landscape, the decline of cash, the cautious approach to rate cuts, and the uncertain future of digital currencies all underscore the shifting dynamics of the country’s financial system.
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