operational inefficiency, poorly designed accounting practices, legal uncertainty and inadequate supervision, can degrade the performance of national as well as regional financial markets, frustrate exporters, importers and businesses. Further, these conditions can lead to dramatic manifestations of inefficiency and abuse, and challenge the credibility of the central banks in our countries. When the SAARC region trade and investment flows increase, we will not be able to reform the clearing mechanism urgently to accommodate cross border flows. The ACU has reached crossroads, requiring urgent reforms, if member countries are still interested in maintaining the long-established goodwill and regional cooperation through it. 4  BIS Review 79/2007  6. Outline of a policy framework  It is hard to come up with a blue print or reference framework for establishing a regional payments group without deliberating the topic with the SAARC member central banks. Nevertheless, I wish to outline the key elements of such a framework and a road map which can be developed further by task forces or a working group appointed for the purpose. First and foremost, it is necessary to get the commitment and consent of central banks in forming the regional payment initiative. Second, it is necessary to engage in a stocktaking exercise to gauge the effectiveness and appropriateness of the existing payment instruments, payment systems, clearing mechanisms, settlement systems and infrastructure in the region to identify their weaknesses, inefficiencies, safety levels and risks.
Averagesize farms continue to be relatively small, thus restricting the development and growth of average productivity, or differently known as “the economies of scale”. There are many reasons behind this. We can mention the inheritance of the communist system and the separation of land after its collapse. As it was stated above, the lack of a normal land market also due to ownership problems, naturally plays an important role in establishing larger farms and, consequently, more competitive ones. These problems also affect the agricultural sector-bank relationship and the lending activity at home. The recent data show that lending to the agricultural sector accounts for 1.25% of total lending to businesses, on average. It is a considerably low figure, which should raise our concern, considering that this sector contributes by one/fifth to the gross domestic product. I believe that there are two reasons driving the banking system to be reluctant to finance different projects in this sector. First, risk classification and categorisation for credit to agricultural sector is a commitment different from the other activities. The lack of formalisation, even for matters such as regular maintenance of information and statistics  BIS central bankers’ speeches  3  about ownership, and financial statistics, damage the farmers’ credibility from the early steps of lending. I find that there is room for prudential intervention by public institutions, not to condemn farmers, but to better prepare them and assist them in formalising their business.