Convergence Between the EU and Central and Eastern Europe
Edited by David G. Dickinson and Andrew W. Mullineux
Chapter 13: Payment systems and economic development in transitional economies
13. Payment systems and economic development in transitional economies Maxwell J. Fry INTRODUCTION It was noted that in most countries, central banks are responsible for national payments systems, as well as monetary policy and financial stability. For example, the Bank of EnglandÕs mission statement specifically recognizes the promotion of sound and efficient payment and settlement arrangements as an important element of the BankÕs core purposes. Gerry Corrigan, former President of the Federal Reserve Bank of New York, also recognized this important role when referring to the ÔtrilogyÕ of central banking functions and responsibilities: monetary policy, banking supervision and payment systems. In the transitional economies, central bankers have faced uncompetitive and uncooperative commercial banking systems. Despite or because of this, central banks in the transitional economies are more heavily involved in their countriesÕ payment systems than are central banks in the industrial countries. There is now a general appreciation among both central and commercial bankers that the operation of payment and settlement arrangements is not something that can simply be left for the Ôback officeÕ to sort out. Because of their role as the ÔplumbingÕ of the financial and banking system, how efficiently and safely these arrangements operate has become an issue with wider strategic and policy implications for central banks. This Chapter has two basic objectives. The first is to examine the reasons why central banks are interested in payment systems. The second is to provide an overview of the role of central banks in the payment system...
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