Abstract

Spurred by globalization and integration of markets and the concurrent growth in private capital flows, country authorities are reviewing their payment systems with a view to enhancing the operational efficiency, reliability, speed, and timeliness of payment transactions, while reducing or containing financial (and most notably systemic) risks. The urgency of taking certain initiatives may be due to the pace of economic growth and structural transformation occurring in the economy or the need to support ongoing deregulation and liberalization of money, exchange, and capital markets; it may also be due to the emergence of new technologies that make certain activities economically efficient. Not surprisingly, the forces at play have differed among countries with respect to the level of development of their economies and their financial markets, the state of their integration with the global economy, their geographical and economic size, and the rapidity with which structural (including financial sector) changes and reforms are taking place in their economies. But, in all countries, rapid progress toward indirect monetary policy, financial liberalization, and currency convertibility have often required concomitant reforms in payment system policies and operations.

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