As the issuer of Australia's banknotes and the provider of exchange settlement accounts for the financial sector, the Reserve Bank has been giving considerable thought as to what the future might look like, said RBA Governor Philip Lowe yesterday.Opening the 2017 Australian Payment Summit in Sydney Lowe said: "I am being asked increasingly frequently: does the RBA intend to issue a digital form of the Australian dollar? Let's call it an eAUD.""The short answer to this question is that we have no immediate plans to issue an electronic form of Australian dollar banknotes, but we are continuing to look at the pros and cons," Lowe said."At the same time, we are also looking at how settlement arrangements with central bank money might evolve as new technologies emerge."Lowe posed five "working hypotheses":•    there will be a further significant shift to electronic payments, but there will still be a place for banknotes, although they will be used less frequently;•    it is likely that this shift to electronic payments will occur largely through products offered by the banking system, although this is not a given, and it will require financial institutions to offer customers low-cost solutions that meet their needs;•    an electronic form of banknotes could co-exist with the electronic payment systems operated by the banks, although the case for this new form of money is not yet established; •    if an electronic form of Australian dollar banknotes was to become a commonly used payment method, it would probably best be issued by the RBA and distributed by financial institutions, just as physical banknotes are today;•    another possibility that is sometimes suggested for encouraging the shift to electronic payments would be for the RBA to offer every Australian an exchange settlement account with easy, low-cost payments functionality - about which Lowe said:  "To be clear, we see no case for doing this"; and•    it is possible that the RBA might, in time, issue a new form of digital money - a variation on exchange settlement accounts - perhaps using distributed ledger technology, and this money could then be used in specific settlement systems (Lowe said the case for doing this had not yet been established, but the RBA was "open to the idea").Lowe concluded that, while advances in technology are leading to much greater use of electronic means of payment and the development of new payment methods, the process had much further to run. And physical banknotes are likely to remain an important part of the payments landscape for many years to come."This shift to electronic payments is most likely to occur through products offered by the banking system," Lowe suggested. "The NPP is a very big step here. If it had not been developed it is likely that non-bank solutions would have gained wide acceptance. This may still happen. "But it seems plausible that Australian households and businesses will continue to hold the bulk of their money in the form of commercial bank deposits, which come with flexible, low-cost electronic payment options,