does not mean that people suddenly lose their capabilities. in the future, we see more active and demanding aging population requiring services online as they have used to get them during working life. with experience these people may be more risk sensitive and they are able to demonstrate their needs, but they are no way hindering services development, rather the contrary. it goes without saying that the younger population considers the internet and mobile services as selfevident. people today are used to being online all the time and they are used to travelling according to their wishes. in my youth, a trip from helsinki to stockholm was special, nowadays young people choose where they want to travel or study globally, and people have summer cottages in thailand. in these circumstances it is very difficult to justify why payments need excessive bureaucracy or time. international payment card companies have succeeded to create a global acceptance network benefiting the card users, though authorities in several jurisdictions have pointed out problems in their fee structures. the single euro payments area, sepa, harmonizes european payments : payment services directive harmonises the rights and liabilities of payment service providers and their customers and sepa standards harmonise the technical environment of payments. the migration to sepa may be a burden, but in the long run, it is a source of efficiency and should be seen in that light. bank of finland approach to payment services bank of finland has a longstanding view that the role of central banks should remain rather limited in retail payment systems. central banks as overseers and regulators should promote competition friendly environment for retail banking and payment services as well as ensure that the systems are safe, reliable and efficient to the society as a whole. central banks can act as catalysts for change and improvements. however, retail payment related services should not be provided by central banks as this may distort the competitive environment. bis central bankers ’ speeches we have pointed out and expressed five principles against which we evaluate the development of payment services. firstly, we wish to promote technical efficiency making payments cheaper, faster and more secure. technology is not a goal itself but a tool. often in adopting new technologies in network industries we face the chicken and egg problem : when is the market ripe for new technologies and when the technologies are ripe to benefit the industry and its customers. sometimes here, the central bank ’ s catalyst role may be needed. the second principle for payment services is non - discrimination. there are people who may have limited capabilities to use internet or mobile services. strive for efficiency must

a formidable challenge. in the current scenario, limitations on the supply response to the momentum of growth are showing up as excess demand pressures. monetary and financial conditions are reflecting these demand supply gaps as well as the onset of a durable pick - up in aggregate spending. banks ’ non - food credit is expanding above 30 per cent for the fourth year in succession, driving up money supply and squeezing overall liquidity. the growth of bank credit has favoured retail lending, particularly housing, real estate, trade transport and professional services and non - banking financial companies – sectors which hitherto were not priced into the credit market. while banks ’ exposures to these new sectors is still relatively small, given the low base, the high rates of growth have raised worries about the quality of these assets and potential nonperformance. default rates in regard to credit card receivables and personal loans have been rising. while buoyant deposit growth has, to an extent, alleviated the financial constraints on banks, credit deposit ratios remain high and investments in gilts have been drawn down to close to the statutory minimum of the slr. these developments are likely to pose challenges to banks in managing liquidity. financial markets have, by and large, remained stable. money markets experienced generally orderly conditions along with spells of tightening of liquidity in november and again from mid - december. during these episodes, contrasting conditions have often been observed when short - term interest rates have firmed up despite laf absorptions but long - term rates have declined in the government securities market. in december, there was an inversion of the yield curve and a narrowing of yield spreads. forward premia have firmed up in november and december across the board in concert with the hardening of short - term interest rates in the domestic money market segments. on the other hand, asset prices, particularly equity prices, have risen to record highs. another significant feature of recent domestic developments is the firming up of inflation through the year. currently hovering above 6 per cent, inflation, in terms of the wholesale price index, is ruling above indicative projections and represents a key concern in the evolving macroeconomic outlook. in terms of consumer prices, inflation is even higher in the range of 7 - 8 per cent. in crafting appropriate monetary policy in these conditions, it is important to undertake a careful assessment of the manner in which inflation is evolving. primary articles, unlike in recent years, have contributed significantly to wpi during 2006 - 07. accounting for