useful life for other equipment is about seven years. firms must invest in computers at a faster rate than that for other forms of capital just to maintain a given level of the capital stock. the rapid replacement of high - tech capital means that technological progress becomes " embodied " in the capital stock at a faster rate than is the case for longer - lived assets. the second feature of high - tech equipment that sets it apart from other classes of capital is the sensitivity of its demand to fluctuations in the cost of capital. economists have debated for decades about the magnitude of cost - of - capital effects on traditional capital goods. a past consensus was that there probably was a cost - of - capital effect but that it was small and very difficult to identify empirically. a somewhat different conclusion has arisen lately when the same basic models of investment are applied to spending on computers alone. the latest research shows that computers are quite sensitive to movements in the cost of capital, and as a result of the 20 percent per annum decline in relative computer prices, the cost of this type of capital fell rapidly in the past decade. this combination of a high price elasticity and a rapidly declining price led to the boom in high - tech investment. a third characteristic of high - tech investment is the magnitude of " external " or " spillover " effects that it generates. high - tech equipment generates benefits not only to the owner of the machine but to other agents in the economy as well. i am thinking in particular about so - called network effects - - that is, linking computers together makes possible larger productivity gains than do computers operated as stand - alone units. although difficult to measure, such network effects certainly have stimulated the demand for high - tech equipment and have helped to speed up the dispersion of new technologies. supporting structural changes the technological changes inspired by investments in computers have enhanced the ability of businesses to reduce their operating expenses. in many industries, investments in information technologies have helped firms to cut back on the volume of inventories that they hold as a precaution against glitches in their supply chain or as a hedge against unexpected increases in aggregate demand. product development costs have probably also been reduced through the use of better computer hardware and software, and new communications technologies have increased the speed with which firms can share information - - both internally and with their customers and suppliers. this is the intersection of macroeconomics and management. many business observers now believe that these newer technologies are not only reducing the cost of transforming inputs

the question, raised by the economist - why banking industry appears to be taking a back seat and just observing the new entrants come in droves? is this just a clever distraction? i have been told once by a ceo of a major bank, half joking, that once they grow, we will buy them. there is some truth to this statement. a great number of non - bank payment initiatives ended up being provided either in collaboration with banks, via banks directly, or outright owned by banks. therefore when we talk about increased competition that non - banks can bring into the field of payments we have to ask ourselves if that is just a wishful thinking or these new institutions really have a chance? i hope we will go deeper into this topic during the conference. introduction of these disruptive technologies, like internet, smartphones, etc. are bound to lead to major innovations in payments. but technology is not the only ingredient for successful payment business. network and trust are also of key importance. moreover, often the main breakthroughs are made when market participants join forces together leading to standardization. be it the promotion of a new and efficient payment scheme or setting up an underlying infrastructure. at the same time competition authorities become very uneasy, once they see market participants sitting around the table discussing future market arrangements. this is the reason why we need to find a healthy and comfortable format for these discussions to take place. bis central bankers ’ speeches progress in technology is a powerful wind of change. but regulation can also lead to positive change if it is implemented with good timing and with an appropriate scope. i strongly believe that the right regulatory framework, that provides incentives and embraces new technology could modernize payment services and change the status - quo. i will stop here by saying that here at the central bank we have high expectations built on nonbanks both for channeling innovations and for refreshing competition. currently lietuvos bankas is working on a comprehensive national payments transformation strategy and nonbanks, i expect, will be one of the key players there. the main objective of this conference from our side is to hear the views of a wider audience and to learn what the near future is about to bring. i would like to thank sveriges riksbank for organising this event jointly with lietuvos bankas and for close cooperation during preparations and would like to invite ms cecilia skingsley, deputy governor of sveriges riksbank, for the introductory presentation. bis central bankers ’ speeches