result of consolidating growth. governments and financial players must prepare themselves for it. they are aware of that. do the divisions within the european central bank ( ecb ) over the withdrawal of exceptional monetary policy measures weaken its credibility? the european treaties chose for monetary policy to be steered by a governing council precisely to allow for the expression of different viewpoints. this range of opinions is an antidote to groupthink. what ’ s essential is to come to a consensus at the end of the discussion, which is nearly always what happens. there is no disagreement over the current monetary policy stance. how can one avoid the reduction of monetary support causing panic on the markets? the choices available to the ecb are too often caricatured by its observers. some fear that we might traumatise the financial markets if we turn the dial of monetary policy by a millimetre, while others prescribe a forced march towards normalisation. the reality is quite different. as early as last december, we scaled back our asset purchases without undermining the support given to the economy. so, i would argue that we have already adjusted our monetary policy, and this was made possible by the continued improvement in the economic situation. this adjustment has been done in a very careful way, as a number of factors continue to weigh on inflation. if needed, the governing council will continue to adjust its instruments both qualitatively and quantitatively. but when this is needed, it should do so carefully and flexibly, and based on what matters for us within the framework of our mandate : the inflation outlook. we must be transparent in our communications on these developments. otherwise we run the risk of a more abrupt adjustment for the markets when the decisions are actually taken. but inflation today is very close to the objective of 2 %... we base our decisions on facts, but make no mistake – without monetary support, inflation today would not be approaching 2 %. that gives us reason to be careful. the underlying inflationary pressures are still weak. another issue that we are monitoring closely is the impact of the ecb ’ s negative deposit rates on the banking sector and its capacity to support the economy. banks ’ profitability and the growth in credit show that fears over negative side - effects are not justified at present. in the light of these observations, there is no reason to change our strategy. some economists argue that low rates are contributing to speculative bubbles forming, in particular in the housing market

branches, pakistan has the highest number of people per bank branch in the region. until now, the lack of a sizable distribution network had been a major challenge in broadening access to financial services. as a result, a large segment of the population, particularly those living in rural and remote areas have remained deprived of banking services. an important implication of this exclusion is that this large proportion of population has been overwhelmingly reliant on cashbased transactions, thus causing a negative impact on documentation of the economy, the tax - base, efficiency of economic transactions, etc. developing bricks and mortar branches is a costly proposition. to encourage fis to develop alternative delivery channels, sbp in 2008, introduced branchless banking ( bb ) regulations. the regulations are applicable to all commercial banks, islamic banks and microfinance banks in pakistan. these regulations have actually catalyzed a number of branchless banking deployments with dual advantages : first, there is enormous scope for expanding outreach, especially to hard - to - reach rural areas. the emerging models relying on “ banking agents ” will greatly extend the distribution of financial services to the poor and marginalized segments. second, alternative delivery channels promise significant cost reduction to institutions. due to these benefits, the expansion in the retail network of microfinance has arisen overwhelmingly from agents and mobile phone channels. mobile phone banking is now the new market niche for both banks and mobile network operators ( mnos ), and many of them are preparing to enter in this exciting market in a big way. in almost 2 years, the branchless banking deployments with 22, 500 agents offering lowcost services all over the country, including in the hitherto neglected areas, have surpassed the 10, 000 branch network of banks. the fast mobile penetration and its continuing strong growth fuels expectations that transformational branchless banking models would prove a game - changer in improving access to finance in pakistan. bis central bankers ’ speeches the state bank of pakistan always welcomes innovative products and desires to work with development partners in the promotion of such products that offer choices for banking or payment services in terms of cost, risk, and convenience. certainly, benefits of such initiatives for the economy are overwhelming. i strongly believe that where conventional banking has its limitations, the electronic payments and mobile banking products should fill the gap. in particular, the challenge is to extend these services to “ unbanked ” or the underserved segments of the population, that mostly reside in far flung rural areas.