outstation cheque transactions, it is noted that the full benefits of this technology are not passed on to customers by way of speedy cheque clearing due to reluctance by some banks to upgrade their cheque imaging technologies partly because of the cost of acquiring new machines or for reasons known only to banks themselves. what is clear is that sophisticated and modern it development has not been customer centric, aiming at reducing their transaction costs or enhancing service. the situation has improved after much persuasion by the central bank, but not through initiatives taken by banks. 8. staying ahead 8. 1 the banking sector is being driven by globalization, consolidation and convergence across the world with the pressure focused on achieving increased shareholder value through measurable investments in technology, cost reduction and performance management. customers today require easily accessible services operating on a global platform, while investors strive for optimizing and maximizing returns. successful banking institutions stay ahead and set the trends by adapting to market shifts, being proactive, keeping up with customer demands, and implementing change. 8. 2 in the sri lankan context, the implementation of new and comprehensive it systems is considered to be costly and the banks tend to compromise on the use of integrated solutions and advanced technology. often, they prefer to adopt partial and ad hoc solutions, which may be less costly. be it comprehensive or not, the primary objective should be to pass on the benefits of it development to their customers by way of more efficient and speedier service at affordable costs. while some customers, the high networth customers in particular, do not consider the high cost of banking services as a deterrent, many medium and small scale businesses and individuals consider banking services to be unaffordable. in this scenario, some segments of the population would not reap benefits of the advancement of technology due to the denial of access to finance. there are many other areas where despite it development in banking, the associated systems have not facilitated customer transactions at affordable costs. a classic example is the world - wide remittance flows. due to the high cost of payments to banks, both at the capturing and the distribution points, nearly half of the world remittance flows are still in the hands of the informal systems like hawala and undial. clients tend to move towards the informal financial sector, which is a form of financial exclusion. it is noted that, in recent times, banks in sri lanka have made some attempts to capture remittance flows through various means, by providing e - banking services through

through foreclosures are likely to seek new homes as their income permits, even though many may re - enter the housing market as renters rather than buyers. on the state and local side, a rising economy should boost sales and income tax revenue, and help narrow near - term fiscal shortfalls. we also need to remain watchful for signs that low interest rates could foster a buildup of financial excesses or bubbles that might pose a medium - term risk to both full employment and price stability. fortunately, current risk spreads on u. s. financial assets are not unduly compressed. this suggests that people are still being relatively cautious about taking on a lot of financial asset risk. on the inflation side of the ledger, there are some signs that core inflation is now stabilizing after falling for several years. at the fed, we track core inflation ( which excludes the volatile food and energy prices ) because experience and research tell us that core inflation provides the best measure of whether overall inflationary pressures are building up or subsiding. core inflation has proven quite reliable in predicting future total, or “ headline ” inflation rates. at the moment, both headline and core inflation remain below levels consistent with our dual mandate objectives – which most members of the fomc consider to be 2 percent or a bit less on the personal consumption expenditures ( pce ) measure. recent evidence shows that the large amount of slack in the economy has contributed to declining inflation over the past couple of years. i expect this slack to continue to dampen price pressures in the near term. inflation expectations are well - anchored today and we intend to keep it that way. a sustained rise in medium - term inflation expectations would represent a threat to our price stability mandate and would not be tolerated. nevertheless, we always need to be careful about inflation – even in an environment of ample spare capacity. let me focus on one issue, commodity prices, for a moment. surely some of the businesses in the audience have faced the challenge of sharply rising oil, food or metal prices in recent months. for example, the spot gsci – a broad measure of commodity prices – has risen more than 35 percent over the past year. this was in train before the upheavals in the middle east and africa raised market concerns about potential disruption to oil supplies, pushing energy prices – though not other commodity prices – still higher. commodity price pressures are pushing measures of headline inflation above measures of core inflation, which, as i mentioned