. atms initially offered a key banking service - cash withdrawals around the clock. with the latest surge in deployments, atms seem now to be located on nearly every street corner. over the longer term, the expansion of atm networks and their integration into broad “ point - of - sale ” networks may ultimately improve the convenience of and increase the demand for on - line debit cards. in countries such as canada and the united kingdom, 20 % or more of non - cash transactions are now made by debit card over nationwide networks. credit cards offer another interesting example. credit cards began more than 75 years ago as store charge cards. these cards received a boost in the 1960s with the creation of branded bank cards and have since grown in popularity. the cards can be used on a 24 - hour basis. initially, the locations where they could be used were limited, but these have grown significantly along with overall credit card use in recent years. consumers and merchants have now widely adopted credit cards to make payments arising from electronic commerce. there have also been efforts to make the use of credit cards over open networks more secure and to increase protections to cardholders. other attempts at payment innovations also suggest that convenience, confidence, and complexity are important. the automated clearinghouse, designed to provide a very low cost electronic payment mechanism, has been very successful in automating many types of recurring payments. early uses of the ach, however, did not generally provide for flexible interfaces with consumers and businesses. to make an ad hoc electronic payment over the ach, for example, would generally have required a special trip to a full - service banking office during regular business hours. from the standpoint of timing and location for making such types of payments, the check was clearly a superior instrument for consumers and many types of businesses. some recent innovations such as point - of - sale check truncation and electronic bill payment systems now provide interfaces between the ach and consumers and businesses that may significantly stimulate the use of the ach over the longer term. in pilot tests of stored - value products, consumers have been able to use innovations such as stored - value cards only at very limited numbers of locations. there have been no real market tests yet of cards that can be reloaded at home computers or telephones. in theory, this capability could be equivalent to placing an atm in every household. on balance, because consumers have not perceived the characteristics of stored - value cards to yet equal or improve on those of

it is clear that that government decision proved to be a very wise one. the independence of central banks is vital for their success in carrying out their functions and achieving their goals. why is that? the answer is that democracies have an inflationary bias. there are two reasons for this : the first is that an expansionary interest rate policy, i. e., a reduction in the interest rate, tends to have a positive effect, mainly on gdp, and only later does it lead to inflation, and since governments in democracies generally have a short - term horizon, this leads to a preference for interest rate reductions. this tendency is most marked in the approach to elections. an independent central bank can make decisions with a view to the long term, and can ignore political pressures. the second reason is that the central bank can finance government activity by printing money, which results in inflation. it is very easy / convenient for the government to request financing from the central bank, instead of imposing taxes or trying to raise money by issuing bonds on the financial markets. in the well - known words of keynes in the period of hyperinflation in europe after world war i : “ a government can live for a long time, even the german government or the russian government, by printing paper money … a government can live by this means when it can live by no other. it is the form of taxation which the public finds it hardest to evade and even the weakest government can enforce. ” this situation was a familiar one in israel in the early 1980s, until an end was put to it in 1985, when as part of the economic stabilization program the law known as the “ no printing law ” was passed. this law prohibited the central bank from providing loans to the government, and in practice was the first step towards the independence of the bank of israel. unfortunately, no progress was made since then with regard to the bank ’ s independence. this did not happen only in israel. throughout the world, in the course of the last 25 years central banks have been granted independence. why did governments give independence to their central banks and relinquish the ability to obtain finance from them and to influence their interest rate policy? a. governments understood that without giving their central banks independence, they would probably find themselves in situations of high inflation, as happened in the 1970s and 1980s. b. they also realized that the economy performs better with an independent central bank. c. a by - product of