Our study shows that the unit cost for cheque processing by banks has increased from RM3 in 2011 to RM4 in 2016, and is estimated to be about RM6 by 2020. At around 120 million cheques currently, this translates into an enormous cost of around RM480 million, a sheer wastage to the economy. It is also costly for businesses to handle cheques. We estimate an average processing cost of about RM6.80 per cheque due to expenses incurred on delivering, depositing, reconciling and handling of returned cheques. On the contrary, the cost of processing an Interbank GIRO and Instant Transfer (IBFT) are around 30 sen per transaction. Such unit cost is likely to decline further due to economies of scale as e-payment adoption gains further traction. In Scandinavian countries, higher cost has been the one of the key factors that drove the cheque volume to a negligible level. Denmark, for example, turned off its interbank cheque clearing system on 1 January 2017 once cheque usage was widely displaced by electronic fund transfers and debit cards. In the case of Malaysia, we estimate that at the current rate of decline, it will take us about 27 years before cheques can be reduced to a negligible level of 0.1 per capita, with an estimated cost to the banking and business community of about RM12.9 billion. This is a huge amount of prodigality.
The economic crisis that began in 1997 represents the latest national challenge. True to historic form, Korea has responded decisively and vigorously to that challenge, with the Bank of Korea playing a critical role in the overall effort. A strong case can be made that, of all the countries affected by the broader crisis in the emerging markets, Korea has gone furthest to repair the damage and institute underlying reforms to prevent future crises. That said, in Korea and elsewhere, the recovery is not yet complete, and more remains to be done. The depth, breadth and rapidity of economic and technological developments of the last several years clearly underscore the increasingly international nature of policy challenges, and the dramatic transformation of the international financial landscape. The intensified integration of markets - reflecting the globalization of capital, production and labor - has increased the risk of contagion, making it virtually impossible for any country that wants to be part of the global trading system to insulate itself from external forces. The crisis and the recognition that we have entered a new environment have set in motion a range of efforts dedicated to building a new international financial architecture. My remarks today will focus on what I believe can be done, from my perspective, to enhance domestic financial resiliency, within the context of these international efforts, and particularly on two essential building blocks: a strong financial system and a sound and stable macroeconomic environment.