Michele Bullock: Panic, pandemic and payment preferences

Keynote address by Ms Michele Bullock, Assistant Governor (Financial System) of the Reserve Bank of Australia, at the Morgan Stanley Disruption Evolved Webcast, Online, 3 June 2020.

The views expressed in this speech are those of the speaker and not the view of the BIS.

Thank you to Morgan Stanley for the opportunity to speak this morning.

We are living through quite extraordinary times. The COVID-19 pandemic is having dramatic effects on economies around the world, impacting employment, businesses and households. Monetary and fiscal policies have been heavily mobilised to help bridge the impact of the containment measures on economic activity. But the health crisis has also disrupted aspects of the retail payments system; payment patterns have seen large, sudden shifts as merchants and consumers have changed both their payment preferences and their mode of interaction. Payment service providers have tried to accommodate these shifts in preferences in a fast-changing environment.

Today I want to address the potential implications of COVID-19 for the payments system. While we have until now been thinking about disruption to the payments system mostly in terms of the entry of new technologically enabled service providers, the abrupt changes in payment preferences induced by the health crisis could be a similarly disruptive force. The extent to which it is will depend on whether the changes in behaviour are temporary or permanent.