Remarks on evolving payment system issues

GOOD MORNING, ladies and gentlemen. On behalf of the Federal Reserve Board and the Journal of Money, Credit, and Banking, I would like to welcome you to our Payment Systems Research and Public Policy Conference. I am particularly pleased to greet our guests from overseas. I believe the international participation in this conference reflects the growing worldwide interest, not only of bankers and policy makers but also of researchers, in payment system issues. The increased attention to these issues reflects recent deep-seated political changes as well as economic developments. Many of the countries of Eastern Europe and the former Soviet Union, for example, are rebuilding payment systems to support market economies. These countries-are interested in very fundamental questions of payment system policy and design. The European Union countries are also grappling with basic payment system issues as a result of the steps being taken toward monetary union. At the same time, central banks in the G-10 countries have continued to emphasize the importance of controlling and reducing payment and settlement risks in global financial markets. Recently there has also been extensive interest surrounding market efforts to develop new electronic banking and payment products for consumers, including efforts to introduce stored-value payment cards, potentially secure payment mechanisms for the Internet, and new versions of home banking products. In view of all this current and prospective change, I would like to make a few remarks about three topics; money, the payment system infrastructure, and payment system risk. My aim is to provide some general background for your discussions over the next two days.