Dr Lowe told a payments systems online conference that cash still has an important role to play as an emergency payment method.

He says there are always stories where a bank's systems have gone down or a merchant's internet is not working so an electronic payment can't be made.

"In almost every case you can guarantee that you can use cash to make the payment," Dr Lowe told the Australian Payments Network conference.

"So I think many people will want to hold cash."

However, he said if the electronic system was more resilient, that would probably take away the desire of at least some people to carry $50 or $100 notes in case something goes wrong.

"But we need a payment system that can work when the electronic system isn't working and cash is the best one so far," he said.

The impact of the coronavirus pandemic has seen the stock of notes in the economy at its highest in at least 50 or 60 years, with strong demand for $50 and $100 notes.

Dr Lowe said in the first days of the pandemic people were nervous, some were taking their money out of the bank, although not to the same magnitude of the global financial crisis a decade ago.

"That settled down pretty quickly," he said.

Even so, many people were taking out a few hundred dollars extra to keep at home just in case something went wrong.

"There was a lockdown and they wanted to make sure they had some kind of cash that they could use to buy the basic necessities".

Dr Lowe said in time he expected the notes to "come out of the system and back to the Reserve Bank".

The governor made no reference to monetary policy or the state of the economy during his address.

Australian Associated Press