Building awareness and confidence To enhance awareness and confidence in the use of e-payments, BNM will continue to work with the financial services industry to strengthen security measures, thus ensuring that epayment transactions remain safe and secure. Significant resources are devoted to educate and guide the public in adopting e-payments through nationwide roadshows, media engagements, township campaigns and outreach programmes. The initiatives that I just outlined provide the foundation for e-payments to be less costly and to offer to the public a cheaper alternative to paper-based payment methods. The market incentive structures on the other hand, will foster effective competition and sustain the industry efforts in providing value-added and efficient payment offerings to their customers. It is in the interest of all for the financial services industry, especially the payment infrastructure providers and the financial institutions, to work cohesively to enhance the payment services where gaps remain. This should be complemented with shared investment in infrastructure building and network expansion to achieve economies of scale. 2  BIS central bankers’ speeches  2. Key priority areas to accelerate the displacement of cash and cheques  Progress in the displacement of cheques should be sustained Promising progress has been made in the reduction of cheque usage through the use of electronic funds transfer services such as the Interbank GIRO (IBG) and the Instant Interbank Funds Transfer (IBFT). This is mostly attributable to the lower transaction fees and the efforts by the financial institutions in offering incentives and guiding their customers to adopt e-payments.

Leaving on one side possible, though not necessarily likely, international developments outside our control - a hard landing in the US, for example, or a precipitate realignment of exchange rates, or a further spike in the oil price - there are two major uncertainties. The first is the familiar uncertainty relating to the path of overall demand growth. On almost any basis, we start from a position in which the economy as a whole is operating close to capacity. That is reflected in the evident tightness of the labour market, including increasing evidence of skills shortages. If we are to avoid a potentially sharp reversal in earnings growth and accelerating inflation, we need to see a slowdown in the rate of domestic private sector demand growth to accommodate not only the stabilisation of our external current account balance but also the public sector expenditure growth which the Chancellor has already announced, not to mention whatever he may be planning to announce tomorrow. There are signs that this slowdown in private sector demand growth may be beginning to happen, but that is certainly not yet assured - and over-generous tax cuts would not help. I must tell you that I am surprised by the billions of pounds that some commentators have suggested the Chancellor could safely give away tomorrow. Going in the opposite direction, we have recently seen a more benign relationship than we might have expected between developments in the real economy and earnings and price pressures - the nominal side of the economy.