Regional cooperation better to support economies - CB Governor

It is rational and logical to think of a regional payment system because a country can relate to its neighbour better than a country far away to bring in stability, security and economic cooperation, said Governor Central Bank of Sri Lanka Ajith Nivard Cabraal addressing the SAARC Finance Conference on 'Towards a Regional Payments Group' organised by the Central Bank on Friday.

He said it is opportune to think of regional cooperation to support economies which face numerous challenges in the changing global environment.

The era of thinking nationally is ending and countries have realised the need to focus on regionalisation. In the 1990s regional groupings grew and countries such as India, Pakistan and Bangladesh have gained immensely from the support they obtained, Cabraal said.

He said there is a new impetus in the South Asian region that did not exist 15 years ago and that the South Asian region is on the threshold of a new era which will bring in more economic, socio-political benefits much faster through regional cooperation.

Today the private sector industries such as accounting, legal sector, leisure, cultural combinations, trade, scientific associations, educational institutions and sports bodies have realised the importance of a developed regional cooperation mechanism.

The South Asian region has one-fourth of the world's population and a vast segment of the population is hit by poverty.It is a huge responsibility but a major strength to the region. The Per Capita Income of most countries in the region is below US $ 1,000.

A prime task of the region should be to increase the Per Capita Income in the region, the Governor said. The Governor said there is a need to improve the infrastructure facilities in the region to attract investors.

Deputy Governor, Central Bank, Dr. Ranee Jayamaha said Sri Lanka, India and Iran have completed stage one of the reforms process to modernise the payments system while Pakistan is in the process of completing it.

She said a long-term objective of the regional payments system is to introduce a single payment system which needs adequate thought.

Central Banks are called upon to coordinate a payments system to ensure its smooth flow and facilitate cross border trade and investment without disrupting the national payment system, she said.

Deputy Governor Central Bank, W. A. Wijewardena said with the growth of information communication technology, Central Banks have modernised their payment systems while facing risks.

LF