The efficiency of any financial system relates both to its role in allocating risk and resources throughout the economy (i.e., allocative efficiency), the economic costs of providing these services (i.e., productive efficiency), and the incentives for ongoing innovation (i.e., dynamic efficiency).
There will be need for introducing supportive legal and regulatory framework which allow for targeting inflation and allow greater operational independence to the central bank, while ensuring that SBP has the desired transparency and communication strategy critical for transition to an eventual adoption of inflation targeting. 4  BIS Review 42/2007