These impediments can take the form of legal and regulatory inefficiencies, structural and performance weaknesses of the markets, the outmoded standards and infrastructure used, or the lack of attention by the central banks and regulatory authorities. While it is important for the national central banks to address these issues and find remedial action early, given the increase in trade, investment and crossborder financial flows, it is essential for the region to have a common understanding and apply, where possible, common standards. 7.3 The design of every payment system requires a series of trade-offs between the different elements of its objectives. The precise outcome of these trade-offs will vary, because they will be closely based both on national realities and international best practice. This emphasizes the need for close and continuous consultation in each country between the suppliers of payment services and the central banks as the overseer and regulator of the systems. The ultimate target of these consultations is to ensure the easy availability in each country of a payment system that meets the needs of its users, that enables the suppliers to cover their costs, and that does not absorb an excessive proportion of the national resources. That is why many regional payment system development initiatives have sprung up over the last few decades. For example, South African Development Community (SADC Payments Initiative – 1996), the Western Hemisphere Payments Initiative (1999); the Commonwealth Independent States Payments Initiative (2004); and the Arab Payments Initiative (2005) are some of the well functioning regional payment Initiatives.

If I may quote from John Exter’s Report of 1949 on the establishment of the Central Bank of Ceylon, (the former name of the present Central Bank of Sri Lanka), it states “It is the monetary, financial and payment systems that facilitate the flow of money in the economy and as such, the Central Bank of Ceylon undertakes a great responsibility in promoting the economic well-being of the country”. Although modern central banks concentrate primarily on price stability and financial system stability, these objectives cannot be satisfactorily achieved without simultaneous development in the payment systems. Therefore, at some stage, all central banks have to  BIS Review 35/2008  1  pay attention to payment system development, although it was taken for granted by many until recent times. 5. Advances and transformation in payment systems development  5.1 Payment systems have undergone profound changes in recent years, primarily in terms of the increased complexity of the production and differentiation of payment services offered to customers nationally, regionally and internationally. Payment systems are evolving towards an evermore universal and sophisticated level of operation. In both wholesale and retail areas, new technologies, new participants and new alliances are beginning to transform the payments system landscape. This transformation is largely due to developments in information and communication technology, and integration and globalization of financial markets at the regional and international level. 5.2 One by-product of this transformation is the blurring of the distinction between wholesale and retail activities.