This work spans (i) purely econometric studies trying to capture salient time series features of term structure dynamics; (ii) a rich finance literature studying the pricing of bonds and interest rate derivatives in a no-arbitrage framework; and (iii) a host of reducedform or structural models trying to link the yield curve to macroeconomic variables. Traditionally, and especially recently, central bank economists have been quite active in that type of research. [6] See Darracq Pariès, M., Moccero, D., Krylova, E. and Marchini, C. (2014), “The retail bank interest rate pass-through: the case of the euro area during the financial and sovereign debt crisis”, Occasional Paper, No 155, ECB; and European Central Bank (2017), “MFI lending rates: pass-through in the time of non-standard monetary policy”, Economic Bulletin, Issue 1. [7] See Gürkaynak, R., Sack, B. and Swanson, E. (2005), “Do Actions Speak Louder Than Words? The Response of Asset Prices to Monetary Policy Actions and Statements”, International Journal of Central Banking, 1(1), pp. 55-93. [8] See, e.g., Altavilla, C., Brugnolini, L., Gürkaynak, R. S., Motto, R. and Ragusa, G. (forthcoming), “Measuring euro area monetary policy”, Journal of Monetary Economics. For similar approaches, see also Cieslak, A. and Schrimpf, A. (forthcoming), “Non-Monetary News in Central Bank Communication”, Journal of International Economics; and Leombroni, M., Vedolin, A., Venter, G. and Whelan, P. (2018), “Central Bank Communication and the Yield Curve”, CEPR Discussion Papier 12970. [9] As a general pattern stipulated in most models, the short-term rate is typically expected to revert back to some long-term mean.

Robust technology and strong internal controls must be in place to protect and preserve the integrity of the financial system. In line with this objective, our banking institutions have successfully replaced the magnetic stripe ATM and credit cards with chip-based cards to ensure a more secure environment for payment cards. This move has effectively eliminated counterfeiting and fraud involving ATM and credit cards in Malaysia. This has provided Malaysia with the platform to further enhance payment card services by maximising the chip infrastructure. The conclusion of this year will see the completion of the industry-wide migration to Europay-MasterCard-Visa (EMV) standards with all of the point-of-sales terminals being fully EMV-compliant. With this, Malaysia will become the first country in the Asia-Pacific region to successfully migrate on a national scale from the magnetic stripe environment to the EMV chip-based credit card infrastructure. Ladies and Gentlemen, For Malaysia to fully adopt e-payments, the task ahead requires great determination and commitment from all sectors. From the Central Bank’s perspective, a strong motivation for promoting e-payments is in the eventual savings from the reduction of paper processing and printing, and the more efficient distribution of money in electronic form in the financial system that generates immediate economic value. Research studies have shown that shifting from an all paper-based to an electronic-based payment system will generate annual savings of about 1% of the GDP.