The question we ask is whether this levelling off is permanent or whether we may expect a further reduction in the use of cash. Let me briefly outline three factors I believe may be of some significance: First, it has become less expensive to use cash in the 1990s. Cash is not an interest-bearing instrument. As such, forfeited interest income is part of the “cost” of using cash. A declining interest rate in the 1990s has substantially reduced this cost, both for the public and banks. Second, the public has been spared the real costs of cash use, while other payment instruments have increasingly been assigned full-cost prices. And third, developments in new payment instruments for small payments - cash cards - have progressed slowly. This is probably in part because we already have a well-developed EFTPOS infrastructure in Norway, and perhaps in part related to what I mentioned above - that cash continues to be an efficient and inexpensive alternative. 7  EFTPOS= electronic funds transfer at the point of sale. 7  BIS Review 7/2000  Predicting further developments in the use of banknotes and coin, both internationally and in Norway, is a difficult task. Low inflation, low interest rates and greater access - for example, via the EFTPOS system’s cash-back arrangement - will promote the further use of cash, whereas new technological solutions will reduce it. Developments in relative prices will also be of importance.
One key driver is the rapid development of Fintech. While the HKMA has done a great deal in the past few years in promoting Fintech, there is still room to further apply new technology in finance in the coming years. This includes, for example, fostering a better ecosystem for Regulatory Technology (or RegTech) and Supervisory Technology (or SupTech). We are also aware that any new risks associated with the increasing use of technology have to be managed. These include for example cyber and data security. We will work with the industry to address these risks. 6. We are also committed to promoting market development opportunities, especially in strengthening the role of Hong Kong as the gateway to the Mainland’s capital markets, in the Greater Bay Area development, and also in green finance. 7. These are rough times. But my colleagues and I will continue to discharge our duties in a professional manner and do our best to serve the people of Hong Kong. 1/1  BIS central bankers' speeches