experts and policy makers had – in addition to finance - led growth – a further dream ready : that of growth through openness to international capital flows. the dream suggested that developing and emerging economies should allow international finance to enter the country without restrictions. such a capital account liberalisation, as it is called, would lead to higher growth rates. the dream was constructed on the basis of state - of - the - art economic theory at that time. and most developing and emerging economies went along with it. … and the reality both dreams crumbled once they were hit by a financial crisis. the growth through capital liberalisation dream fell apart with the onset of the asian financial crisis in 1997. since then, studies have clearly shown that capital liberalisation has no direct positive effect on growth, and only rarely has an indirect one as a result of improving markets. rather, it seems that those countries grow faster that rely less, not more, on foreign capital. 2 most importantly, the studies suggest one crucial insight : whether capital liberalisation is a good thing for an economy depends heavily on its specific situation. for example, if a country r levine ( 2005 ), finance and growth : theory and evidence, handbook of economic growth. d rodrik & a. subramanian ( 2009 ). why did financial globalization disappoint? in : imf staff papers, 56 ( 1 ) : 112 – 138 ; es prasad & rg rajan ( 2008 ) a pragmatic approach to capital account liberalization. in : the journal of economic perspectives, 22 ( 3 ) 149 – 172. bis central bankers ’ speeches has insufficient savings, foreign capital might be the solution. if, however, there are not enough incentives or opportunities to invest in a country, additional capital won ’ t help. which brings me to the other dream, that of finance - led growth. this was not challenged until the financial crisis of 2007 hit. but this has changed thanks to more recent academic studies. they show that increased credit and a higher volume of financial transactions can have negative effects, too. there are two reasons why more finance can be negative. first, higher credit volumes lead to more frequent and more serious financial crises. 3 in other words, as more credit is granted and more financial transactions are carried out, a financial system becomes more crisis - prone. second : the larger the mountain of debt that has built up until a crisis erupts, the more severe the crisis typically is and the longer it

economic mainstream. this would not only promote the opening of banking accounts amongst this target group but would also enable them to enjoy lower cost of financial services and better means of savings, thus benefiting the economy as a whole. as the electronic payment channels become more easily accessible, user - friendly and offered at a low cost, it would thus provide the opportunity to shift the remittance flows from the informal to formal channels. indeed, electronic payments can be one of the strategic tools to meet these objectives and achieve higher economic growth. electronic payment increases operational efficiency and improves productivity levels through expedient payments and receipts of funds. electronic payments would also provide the speed and convenience of making payments from any place or time. it also reduces costs through the reduction of redeployment of resources used for handling cash and cheques. accelerating the country's migration to electronic payments has therefore become a part of malaysia's larger national agenda to increase the efficiency of the nation's payment systems which would ultimately improve the competitiveness of our economy. cash payments in malaysia still account for a large portion of the number of transactions in the economy. going forward it is expected that its use will level off and stabilise with the increased use of electronic means of payments. credit cards, atm cards, debit cards including the e - purse application embedded in the mykad are among the card payments possibilities in malaysia. the increased use of cards is an international trend and is expected to gain significance in malaysia. giro transfers, other credit transfers and direct debit are also gaining significance by both individuals and businesses. finally, internet banking has also begun to experience stronger growth. while we have made considerable progress in promoting the adoption of electronic payment with notable growth registered across all electronic payment methods, paper - based payments still remains the more popular form of payment. cheques continue to account for a high percentage of the total non - cash retail payments while currency - in - circulation ( cic ) as a percentage of gdp remains relatively high at 5. 7 %. in 2006, malaysian consumers on average, made only 0. 7 transaction via direct debit and credit transfer and 0. 2 transaction via debit card transaction as compared to 84. 7 and 109. 5 transactions, respectively, in sweden. hence, more needs to be done to raise the level of adoption of electronic payments. in this regard, the bank has formulated an electronic payments roadmap aimed at bringing together relevant stakeholders to address the barriers that have