Discussions about the declining use of cheques often drift into analysis of the use of cash. And so it was when Tony Richards, head of payments policy at the RBA, presented at an industry conference in Sydney yesterday.After providing a disclaimer that, as transactions involving cash typically do not involve a financial institution, data for the use of cash are actually quite limited, Richards cited the RBA's own Consumer Use Study from late 2013. This showed that while cash was the most important payment method for low-value transactions (around 70 per cent of payments under $20), the proportion of all transactions involving cash fell from 70 per cent in the 2007 survey to 47 per cent in 2013. This trend is backed up by similar stats on the decline in cash withdrawals from ATMs and at the point of sale - without even allowing for the growth of contactless transactions since 2013.And yet, while the use of cash in transactions has been declining, the demand to hold cash has continued to grow, Richards noted. And this holds true for low denomination banknotes as well as high denomination ones."Given the important ongoing role of cash in the payments system, the Bank is currently undertaking a major project to upgrade the existing stock of notes," he said.In addition, "there are some signs that the counterfeiters are getting a bit better with new and cheaper scanning, printing and image manipulation technology," Richards confided.New banknotes to incorporate major security upgrades" are not far away, he said. The first of these 'next generation' banknotes will be a five dollar note, scheduled for release in September this year.The full text of this presentation is on the RBA website.