In just a few years, many new electronic services and gadgets have become natural parts of our lives. This has also influenced how we execute payments. Payments via Internet banking, mobile banking and card payments over the Internet have become the norm. Paperbased instruments such as cheques and mail giros have become less important. Norway is a good example of the transition from a paper-based to an electronically-based payment system. Only twenty years ago, 90 per cent of payments from deposit accounts were made using paper-based instruments such as cheques and paper giros. Today, more than 95 per cent of such payments are made electronically, mostly via payment cards and Internet banking. The first results from Norges Bank’s cost survey were published today. The survey estimates the social costs of using and producing payment services in Norway to around 11 billion kroner, or just under half a per cent of GDP. This estimate covers payment activities by banks, subcontractors, the central bank, households and merchants. The estimate for Norway is quite low in an international context, although estimation methods may vary. How we organise our payment system has consequences beyond the system. Direct debiting and electronic invoicing will, for example, involve substantial savings for businesses. Thus the potential savings for banks and the rest of society of moving towards more efficient payment systems are considerable. Payment cards and Internet banking have not only replaced cheques and mail giros, they have also contributed to a reduction in the use of cash.

We are looking to issue more and in longer tenor, in the future. As for the MAS Standing Facility, we have, in the last two years, progressively expanded the range of eligible collateral. MAS has signed cross-border collateral arrangements with other central banks. Banks can now use as collateral, Euro and Sterling cash, as well as French, German and British government securities. We are now finalising similar arrangements with the US Federal Reserve, so that banks will be able to pledge US Treasury bills and notes to obtain Singapore dollar liquidity at the Standing Facility. These initiatives significantly enhance banks’ flexibility to tap on global sources of liquid assets. Let me now touch on the regulation of financial markets. A key focus of international regulatory reforms has been on the trading of OTC derivative contracts. MAS will meet objectives set by G20 Leaders on regulation of OTC derivatives as well as recommendations by the Financial Stability Board (FSB). We are now reviewing our detailed policies and will conduct consultation by the end of this year on all aspects of FSB’s recommendations. MAS aims to meet FSB target to implement the recommendations by end 2012. There are four key thrusts in FSB’s recommendations on OTC derivatives trading. First, standardise derivative contracts. MAS is working with Singapore Foreign Exchange Markets Committee (SFEMC) to encourage further standardisation of derivative products. The SFEMC will formulate a code of conduct for financial institutions operating in the OTC market. Second, mandate central clearing of all standardised contracts.