Going forward, efforts would also be geared towards leveraging on the high penetration of mobile phones in Malaysia, even amongst the lower income groups. Thus, the convergence of electronic money and mobile phone hold immense potential to reach the unbanked and underserved segments of the population, particularly in the rural or non-urban areas. The mobile channel and electronic money instruments can, not only allow mobile payment and remittance services to be offered to these communities, but can also act as the gateway to extend further financial products and services including credit, savings and insurance. These would bring more from these communities into the formal financial system and economic mainstream and would transform the livelihood of the poorer segments of society. The development of a more inclusive financial system is one of the focus areas, apart from electronic payment in the new financial sector blueprint that Bank Negara is in the midst of formulating. Going green Electronic payment also enables businesses to move towards eco-friendly work environment and practice social responsibility through “green” initiatives. Yes, we are conscious of the “Equator Principles” in finance and banking. The movement away from paper via online banking and electronic payment and the elimination of the need to drive to and from bank branch offices allow customers to reduce their carbon footprints. Statistics have shown that if  2  BIS Review 69/2010  20% of households in the world switch to online payment modes, an estimated 1.8 million trees equaling to 100 million pounds of paper would have been saved.

Adherence to international standards on AML/CFT, including the ability to trace funds back to the source and to positively identify the beneficiaries of the funds, are indeed vital. In Malaysia, electronic money is prescribed as a designated payment instrument in the Payment Systems Act 2003 (PSA) and the Act is under the purview of the Bank. As such, any person who wishes to issue electronic money would be required to obtain the prior approval of Bank Negara Malaysia and is subjected to the prudential requirements imposed by the Bank. In 2005, in line with the objective of reducing the use of cash in the domestic economy, we liberalised our policy by allowing non-banking institutions to issue electronic money. In 2008, the Bank issued the Guidelines on Electronic Money, which outlined the broad principles and minimum standards to be observed by electronic money issuers. As at end-March 2010, 26 issuers have been approved to issue electronic money comprising both card-based and network-based schemes. During the past five years, the use of electronic money recorded encouraging average annual growth of 21.5% and 24.9% in terms of volume and value respectively. With regard to the oversight of electronic money issuers, in particular the non-banking institutions, our objective is to ensure the safety and reliability of the issuers’ systems and operations. We acknowledge, nevertheless, that in this rapidly changing commercial and technological environment, it is becoming increasingly challenging for regulators to develop policies that are effective and appropriate to address the regulatory concerns while at the same time, promote innovation.