Reserve Bank chief issues dire warning about the future of cash – and reveals what will be happening next to the $5 banknote

  • Reserve Bank chief Michele Bullock issued a cash warning
  • Armaguard and Prosegur Australia allowed to merge last year

The head of the Reserve Bank of Australia has warned the future of cash is in jeopardy because it is expensive to circulate banknotes – and strongly hinted that King Charles will not appear on the new $5 note.

Michele Bullock painted a bleak picture of cash distribution during her first appearance before a parliamentary committee as RBA governor.

“As the use of cash for transactions has declined, the economics of cash circulation have come under pressure,” she said Friday morning.

‘This was one of the main factors behind the merger of the two largest cash-in-transit providers last year.’

Michele Bullock painted a bleak picture of cash distribution in her first appearance before a parliamentary committee as RBA governor

Michele Bullock painted a bleak picture of cash distribution in her first appearance before a parliamentary committee as RBA governor

Armaguard and Prosegur Australia won regulatory approval to merge last year, giving the new company Linfox Armaguard a 90 per cent share of Australia’s cash-in-transit market.

This was based on a promise to the Australian Competition and Consumer Commission that it would continue to deliver cash until 2026.

“Linfox Armaguard has since indicated that despite this, its cash distribution business remains unsustainable,” Ms Bullock said.

‘The RBA places a high priority on the Australian community having good access to cash withdrawals and deposits.’

Before the merger, Armaguard had distribution agreements with Commonwealth Bank, ANZ and NAB, while Prosegur, a Spanish company, had an agreement with Westpac.

Ms Bullock told the House of Representatives economic committee she would continue to meet with cash distribution industry leaders.

“These discussions are likely to continue for several months,” she said.

‘Developing a model for cash distribution that is sustainable in the long term is going to require addressing some very complex issues and it’s going to take some time to work through.

‘So I urged the major participants in the cash distribution system to approach these issues with a public interest in mind rather than just their own, narrow business interests.’

Ms Bullock also revealed that the RBA, which owns polymer banknote maker Note Printing Australia, will consult with indigenous groups on the design of the new $5 note after the Queen’s death in 2022.

“Finally, I would just like to update the committee on work that is underway to redesign the $5 bill,” she said.

“Last year we announced that we would take the opportunity to feature a new design on the $5 note that honors and celebrates the culture and history of First Nations people.”

It is a strong suggestion that King Charles will not appear as Australia’s head of state as his mother did as the monarch.

During the last financial year, 718 ATMs were removed, data from the Australian Prudential Regulation Authority showed.

This came as 424 bank branches closed in the year to June.

The number of branches has fallen by more than a third or 37 percent since June 2017, but in six years the number of ATMs has fallen by 59 percent.

Armaguard and Prosegur Australia won regulatory approval to merge last year, giving the new company Linfox Armaguard a 90 per cent share of Australia's cash-in-transit market.

Armaguard and Prosegur Australia won regulatory approval to merge last year, giving the new company Linfox Armaguard a 90 per cent share of Australia’s cash-in-transit market.

Australia has 5,693 ATMs still in existence – less than half the 13,814 level of June 2017.

The number of bank branches fell to 3,588, from 5,694.

It also coincided with cash making up 16 percent of in-person transactions in 2022, down from 32 percent in 2019 before the pandemic, Reserve Bank data showed.