8 terminals per thousand inhabitants. based on a report published by the world bank and the imf in 2013, the higher merchant discount rate or mdr paid by merchants, averaging between 1. 5 % to 2. 5 % when accepting payment card transactions, had the impact of pricing out smaller merchants. lack of effective competition in the payment card industry had led to higher costs for payment card transactions, which would in turn raise costs for businesses and consumers. over a period of 14 months from may 2013 to june 2014, interchange fee, that is the wholesale fee paid between banks in a payment card transaction, were hiked several times. as interchange fee is priced into the mdr, the hikes in interchange fee contributed towards an increase in the mdr for merchants. a lack of price transparency and the overall competition further weakened market pressure to lower interchange fee and mdr. bis central bankers ’ speeches the highly concentrated market also discouraged merchants from switching to another payment card network given concerns over losing significant competitive advantage if they did. clearly, left unchecked, such indiscriminate interchange fee hikes risked bringing about a broad - based increase in mdr which would in turn be passed on to consumers through higher retail prices of goods and services. to curb indiscriminate increases in payment card acceptance cost and foster a competitive payment card market, bank negara malaysia implemented the payment card reform framework in july 2015. under the framework, the interchange fees are subject to objectively - set ceilings, while a market incentive structure was instituted to strengthen the incentives for investments in payment card infrastructure. in addition, measures were also introduced to enhance transparency and competition by prohibiting restrictive trade practices. the results of such measures are very encouraging. these reforms have had an immediate and positive impact on the payment card landscape. the cost of payment card acceptance had started to moderate whilst the annual growth of payment card terminals had tripled from 5. 4 % in 2014 to 18. 1 % in 2015. in addition to promoting effective competition within the payment industry, it is also important to preserve the neutrality of payment and settlement systems. this includes neutrality among instruments and geo - political interests. this is especially true for global and critical market infrastructure providers such as swift where the offer of services to all parts of the world should be guaranteed and reliable. the emergence of other service providers to fill any void should it happen, would be most unfortunate as it could diminish efficiencies gained from access to global market infrastructures

p ( 2010 ), “ rethinking macroeconomic policy ”, imf staff position. bis central bankers ’ speeches monetary policy adjustment process even more complicated and painful. against this background, domestic imbalances or weak policies could aggravate risks and challenges in the adjustment process. given that the fed, as alluded to earlier, is expected to tighten policy first amongst the major central banks, let me spend some time on the impact of the imminent us monetary policy normalisation on emes. monetary policy normalisation implies the removal of extraordinary policy measures that had been implemented to deal with a particular economic episode. in this sense, it refers to a path taken to return to a more “ normal ” monetary policy setting, although no qualification is made as to what exactly constitutes “ normal ” in the post - gfc world. during rate - hiking cycles, a key concern for global markets is the path of us bond yields, as these tend to have knock - on effects on other markets, and this is one of the three financial channels of spill - overs to emes. before i discuss the possible effects of us monetary policy tightening on emes, i would like to mention some factors which could constrain and / or prevent abrupt and unexpected increases in us treasury yields. these are important to note as they may influence expectations about the extent of the impact of us tightening on eme economies. firstly, some central banks like the fed initially adopted a form of forward guidance as part of their normal monetary policy toolkit. although this could have at times contributed to volatility in markets because of the highly uncertain and changing environment in which communication takes place, the aim remained for central banks to be as transparent as possible in terms of the policy outlook. the fomc is also clear on the gradual normalisation path, as also alluded to by the previous fed officials like ben bernanke ahead of the 2004 tightening cycle2. gradualism in monetary policy also reflects the fed ’ s desire to keep bond - market volatility in check – in greenspan ’ s words, to “ not create discontinuous problems with respect to balance sheets and asset values ”. the second important dynamic is that the longer end of the us yield curve is also interrelated with the fed ’ s balance - sheet dynamics. the fomc has indicated that it will consider the cessation of reinvestments of maturing securities only after it commences hiking the policy rate.