living standards among nations is difference in human capital ” ( p. 270 ). so, if we want sustained growth we must promote the accumulation of human capital in transition economies. the next question is : how does the accumulation of human capital happen? obviously, there are many ways in which human capital is accumulated but, to mention just a few : it happens in schools, in other forms of training, particularly on - the - job, in research institutes, etc. therefore it seems reasonable to argue that transition economies should pay special attention to formal education, and other forms of training and research. as the empirical evidence suggests ( flanagan, 1998 ), return to schooling began to rise rapidly during the transition. relatively soon, they approximated those in many market economies. under central planning, the main distortions in human capital formation were the overvaluation of vocational training and the undervaluing of university education. however, the transition process has quickly started to correct this shortcoming of socialism. formal schooling need not be the main factor in developing human capital. let me just mention that according to lucas ( 1993 ), the most central feature of human capital accumulation for growth is learning on the job ( learning by doing ). for this to happen, we need both managers and workers to be constantly exposed to new challenges, to move up on the “ quality ladder ”. in the globalized world of today it seems that one of the best ways to be exposed to new challenges is by exporting. an old latin saying could be paraphrased into : “ exportare necesse est, vivere non necesse est ”. 2 by opening up the economy, we are promoting human capital, which in turn is essential to growth. a similar approach can be used to argue for more foreign direct investments ( fdi ) in transition economies. fdis bring not only physical capital, but : new organization, know - how, etc which then increase “ domestic ” human capital. that is why strategic investors with new knowledge are so important for overall growth. let me be a little provocative and state that unfortunately multilateral institutions rarely talk about human capital explicitly. for example, the ebrd charter ( quoted after bronstone, 1999 ) does not mention developing human capital as ebrd ’ s role. a bureaucratic answer might be that that is not its mandate. but, according to the ebrd ’ s transition report : “ the ebrd seeks to foster the transition to an

through the payment and settlement systems act of 2005. the act empowered the central bank to be the authority responsible for the national payment system, which requires oversight and continuous surveillance of all payment systems to ensure its efficiency and effectiveness. the systemically important payment systems will be reviewed periodically to ensure that the design and operation meet with international standards and best practice. some of you may be aware that a couple of months ago, the central bank established a national payments council which is the highest decision making body with regard to payment systems. this committee represented by all stakeholders provides a forum for constant dialogue on payment issues to take place within the industry. the national payments council is responsible for developing the payment and settlements infrastructure in collaboration with all the relevant authorities and stakeholders. currently, it is in the process of finalizing a road map for the development of the national payment system in the next five years, which will be in line with the vision of the financial sector. in implementing the road map, it is vital that all stakeholders in the payment system understands the significance of payment systems, their impact on financial stability and take ownership and leadership. most central banks at some point or other have been owners, operators, catalysts, overseers and users of the payment system. over the years, central banks have given up their ownership and operator ’ s role and, in some cases, even the catalyst role. banks and financial institutions and even the corporates should play an important role in shaping the national payment system in sri lanka. let me conclude now by giving an important message. payment reforms help to adopt best practices by all stakeholders. with or without payment system reforms, banks and financial institutions should be able to meet their payment obligations. some of the benefits enjoyed by banks and customers over the years will no longer be there under the cit system. the public too has to make adjustments in their payment practices and ensure that there are funds in their accounts when cheques are issued. all stakeholders should change their past practices and fall in line with reforms which are aimed at improving facilities. once again, i thank the royal bankers club for inviting me and extend my good wishes for all its future activities.