in payment and settlement related activities who will attend to the preliminary work, such as stocktaking and identification of gaps in the national payment systems. there should be task forces on ( a ) policy and operational matters ; ( b ) legal and regulatory aspects ; ( c ) technical and institutional infrastructure ; and ( d ) communication and exchange of information. the task forces should make their recommendations to the spc, which will take considered decisions. in nominating members to the task forces, where possible, countries should select officers from their respective npcs, as such councils are expected to have representatives of all stakeholders with the necessary skills and expertise to handle work relating to the above areas. sri lanka has already established an npc with a clear mandate to take forward payment reforms across the nation. the npc has prepared a well - focused action plan after detailed deliberations with all stakeholders and is the apex body for payment system development policies and operations. i understand that india and some other countries too have npcs. it may also be important to set up a secretariat in one of the countries to lead the regional payment initiative. the spc, as well as the task forces, should establish close links with international organizations such as the wb, imf, bis and also with other regional payment groups and developed country central banks for guidance and technical assistance. as i mentioned before, the acu is the only regional clearing mechanism that exists today among saarc member countries. it needs a clear reform agenda to mitigate risks involved in that system and ensure safe payment flows among the member countries. already, a technical committee has been appointed under the chairmanship of sri lanka to look into some elements of modernizing the acu. the whole of yesterday we debated on some of the short - term measures that need to be introduced to the acu clearing arrangements in order to avoid any disruptions to cross border flows. that committee too could report its recommendations to the spc. there may be many other modifications, modernizations and reforms that need to be introduced at national and regional levels which will shape the annual work program of the saarc regional payment initiative. it is in that con text the topic “ working towards a saarc regional payments group ” was chosen as the theme for this conference. 8. conclusion we need not wait till the saarc region ’ s trade and investment flows rise significantly to modernize our payment systems. the saarc member central banks need to decide early to establish a regional payments

and overall economic development interests. central banks, therefore, monitor developments in the payment systems to assess their impact on the demand for money, monetary policy and financial system stability. in many of the saarc countries and elsewhere, the central banks have been playing multifaceted roles like operators, owners, facilitators, regulators, overseers, users and service providers of their national payment systems. through these roles, central banks have acquired expertise, skills and in - depth knowledge on the role of the payment mechanisms in the financial system and the economy. we need to make use of this expertise and share it with others in the region and elsewhere. a regional payment initiative would be a vehicle which would help to achieve this objective. central banks can advise on payment related financial policy and act as effective catalysts, together with private sector organizations, in initiating, promoting and contributing to payment system reforms. by and large, payment reforms, be it national or regional, have been promoted and led by central banks, except in few countries like canada where the private sector initiative has been significant. the central banks in the saarc region also have the ability to play the leadership or catalyst role by providing policy directions, preparing roadmaps in consultation with other stakeholders and guiding national and regional payment system reforms and taking the responsibility to develop a common payment policy framework acceptable to all countries in the region. we need to pay attention to the existing regional clearing mechanisms as well. as in the case of the asian clearing union ( acu ), if there are delays in processing payment instruments, combined with official accounting practices for payments that give rise to a float on the balance sheets of the central banks, that will contribute to inefficiency and uncertainty in the payment process. it is significant to note that such inefficiencies can extend to the central bank ’ s monetary operations and liquidity estimates as floating acu balances cannot be treated as part of the international reserves of member central banks. lack of clarity about rights and responsibilities regarding funds on the move is another shortcoming, especially where processing systems and accounting procedures result in long delays between the time a payment instruction is issued and the time it is cleared and settled. both at national and regional level, supervision and oversight of payment systems have always received less attention compared to the supervision of banks and financial institutions. when there are cross border payments and common clearing and settlement mechanisms, it is important to ensure that there is a well - designed supervisory system. the supervisors