But when the reaction function is well understood, market interest rates will instead respond earlier as the economic data unfolds. Although there are benefits to the market more accurately anticipating a given policy decision, because the data are likely to evolve in an imperfectly predictable fashion, so will market interest rates and asset prices. In sum, then, exit will be challenging, both for the central banks in the countries withdrawing stimulus and those in other countries that will be affected by the international spillovers. But we do have the luxury of knowing that it will come eventually and can plan for it appropriately. And when it does come, it should be against the background of a markedly better economic outlook in the advanced economies. That itself would be a most welcome change. Thank you! References Committee on International Economic Policy and Reform (2011). Rethinking Central Banking, Brookings Institute, Washington DC. Fratzscher, Marcel, Marco Lo Duca and Roland Straub (2013). “On the International Spillovers of US Quantitative Easing”, European Central Bank Working Paper #1557. King, Mervyn (2009). Speech to Confederation of British Industry, Nottingham, 20 January. He, Dong and Robert McCauley (2013). “Transmitting Global Liquidity to East Asia: Policy Rates, Bond Yields, Currencies and Dollar Credit”, mimeo, Bank for International Settlements. Moore, Jeffrey, Sunwoo Nam, Myeongguk Suh, and Alexander Tepper, (2013). “Estimating the Impacts of the U.S. LSAPs on Emerging Market Economies’ Local Currency Bond Markets”, Federal Reserve Bank of New York Staff Report #595. 4  BIS central bankers’ speeches  Neely, Christopher (2010).

This in turn enhances the potential for the industry to provide financing to households and enterprises thus contributing to the economic growth process. Another instance where efficiency and potential of the industry can be enhanced is migration from paper-based payments to electronic payments. This would provide significant benefits to all parties as it provides a more efficient and reliable payment instrument and it attracts lower costs, increased convenience and a higher level of security. In promoting financial literacy, several issues need to be addressed. One of the most critical issues is the apathy towards information. Irrational behavior, the inability to comprehend complex information, the perception that information is unreliable, or more often than not the reluctance to invest the time to study the information, are all reasons that increase such apathy. In addressing financial literacy, the information provided to consumers needs to be simple, brief, contextualised to the needs of the consumer and delivered at the right time. An example is providing special, inclusive programmes for financially excluded groups that are at different levels of development and that face different challenges in managing their financial affairs. The emerging best practices in enhancing financial literacy clearly suggest that an integrated and coordinated delivery of financial literacy initiatives is needed to address the issues highlighted above. This requires a comprehensive approach involving central banks, government ministries, NGOs and corporations to work collaboratively to promote financial literacy. Attention needs to be given to greater strategic focus on the outcomes to be achieved by the financial literacy programs.