Zamani Abdul Ghani: Developments in electronic money management Welcome address by Mr Zamani Abdul Ghani, Deputy Governor of the Central Bank of Malaysia, at the Official Monetary and Financial Institutions Forum (OMFIF) and Lafferty Group – World Roundtable on Electronic Money Management “From Practice to Policy”, Kuala Lumpur, 15 May 2010. *  *  *  On behalf of Bank Negara Malaysia, I am most pleased to welcome all of you to this gathering on “World Roundtable on Electronic Money Management” – “From Practice to Policy”. This event is jointly organised by Bank Negara Malaysia, the OMFIF and the Lafferty Group. As you may be aware, Bank Negara will also be hosting the first ever Asia OMFIF Meeting, which will take place at Bank Negara’s Lanai Kijang over the next two days. This World Roundtable on Electronic Money Management, thus precedes the Asia OMFIF Meeting. It provides an excellent opportunity for the industry to have an interactive dialogue with regulators and practitioners from around the world to exchange ideas, experience and perspectives on developments in the area of electronic money and electronic payments. Economic efficiency and cost savings Rapid technological advancements and innovation in the last two decades had revolutionised the payment landscape. In the retail payments area, electronic money in the form of stored value cards and other access devices has grown rapidly. Businesses around the world are also intensifying their efforts to cut operating costs and increase efficiency to improve their long-term competitiveness and sustainability.

These developments, among others, have intensified the demand for electronic payment. As electronic payment facilitates the automation of payables and receivables, costs associated with paper and labour intensive processes, including potential errors in processing, would be sharply reduced or eliminated. Apart from lowering costs, electronic payment allows for better resource allocation, thus raising productivity and profitability of businesses. Electronic payment also improves cash flow forecasting, thereby resulting in more efficient liquidity management. Furthermore, customer service quality would also be enhanced with the provision of faster and more convenient means of payment. Businesses that respond to these opportunities and are effective in delivering their services will generate greater value for their customers and achieve competitiveness differentiation. The faster electronic payment displaces the use of cash, the less would be the need for the costly printing and supply of currency notes and coins. The same is also true for physical cheques. The strategic management of currency is an increasingly challenging task faced by most central banks. Apart from ensuring cost effective and high quality currency notes and coins, it also requires accurate forecasts of the demand for currency notes and coins, which varies seasonally and with economic activity. The higher acceptance of electronic payment not only improves the economic efficiency of a country, but also allows substantial cost savings to be gained. Studies have shown that widespread utilisation of electronic payment systems has the potential of contributing to at least 1% of a country’s GDP annually.