towards foreign financial markets and eventually towards foreign relocation, then that could be activity lost to new zealand. new zealanders ’ unwillingness to provide equity capital has been an incentive for increased direct foreign ownership. in many cases this has been desirable, even inevitable, for expanding companies. one can see a natural progression whereby some new zealand companies gradually outgrow the technical and market limitations of this country, and as they expand into bigger markets, take on more of the ownership attributes of international firms. but if that happens “ prematurely ”, there is an opportunity benefit foregone for new zealand. new zealand ’ s liberal attitude to foreign ownership has brought us many important advantages. we have enjoyed access to the world ’ s capital, to best practice international technologies, to specialised business skills, and to marketing networks. these have brought higher productivity, employment opportunities, and have contributed to our higher growth rates. this also has to do with the much discussed cultural tendency of some new zealand entrepreneurs to grow their business to sales levels of some tens of millions, then exit for the “ bach, boat and bmw ” semi - retirement subculture, leaving overseas investors to expand the business further and develop its full value internationally. gdp is a measure of what is produced in new zealand, while national income ( which used to be called gnp ) measures the fruits of production that actually accrue to new zealand residents. in 2005, national income was around $ 10 billion lower than gdp, as a significant part of gdp accrued to the overseas owners of new zealand - based companies. ultimately, it is national income that matters for the overall economic wellbeing of new zealanders. the wedge between gdp and national income has some quite complex welfare implications for government, which has to balance how much its policies aim to promote activity in new zealand, or activity owned by new zealanders, whoever or wherever they may be. one particular consequence is seen in our current account deficit, a measure of the external financing required by the country ’ s investment - savings imbalance. in recent years about half the deficit has been represented by the trade imbalance. the other half has mainly been the imbalance of income earned by foreigners in new zealand compared with that earned by new zealanders abroad. measurement problems apart, this appears to have been growing as a result of recent investment trends. a further decline in the ownership share of new zealand business will worsen this deficit and put the balance of payments under continued pressure. interestingly, our net

a barrier to the use of electronic payments, the federal reserve has recently proposed modifications to regulation e that would eliminate the requirement for paper receipts on small - dollar payments. 8 the federal reserve must, however, also be mindful of how changing payment practices can affect risk in the payments system and take regulatory action, when appropriate. for example, the federal reserve recently modified regulation cc to reallocate the liability for unauthorized remotely the term " conversion " generally refers to " check - to - ach conversion, " in which data from a check is used to create an electronic funds transfer that is cleared and settled over the ach network. such transactions include accounts receivable ( arc ), point - of - purchase ( pop ), and back - office conversion ( boc ) transactions. check 21 became effective in october 2004. before check 21, banks were required to present the original paper check to the paying bank unless the paying bank had agreed to accept presentment of the check electronically. see board of governors of the federal reserve system, report to the congress on the check clearing for the 21 century act of 2003, april 2007. http : / / www. federalreserve. gov / boarddocs / rptcongress / check21 / check21. pdf ( 491 kb pdf ) see 71 fr 69500 ( 72 kb pdf ) ( december 1, 2006 ). st created checks among depository institutions, shifting liability to institutions that are better positioned to understand and mitigate those risks. 9 clearly, both regulators and the private sector have a role to play in the continuing evolution of the payments system. regulators must continue to evaluate and adjust their rules in light of new realities in the marketplace. at the same time, the private sector must put forward sound and prudent innovations that address the needs of the marketplace, including the need to control risk. characteristics of successful innovation our conference organizers have challenged us to think about " what ’ s next. " one tool to help understand the future is to analyze why certain innovations have been successful in the past. infrastructure changes have been one source of successful innovation. much of the innovation in the early days of electronic payments involved building new electronic processing systems for ach and card systems, and then gradually expanding electronic access to these core systems. the goal of these infrastructure changes was typically to speed up payments and reduce the societal costs of dependence on paper. following the implementation of check 21, the banking industry and the reserve banks are again