PAYMENT SYSTEM REFORM IN FORMERLY CENTRALLY PLANNED ECONOMICS

The payment system is a linchpin of a functioning market economy, but existing payment systems in many formerly centrally planned economies are in a primitive state, reflecting the legacy of the monobank system . The wholesale payment system can play a fundamental role in facilita ting the efficient exchange of goods, services, and assets, and is par ticularly important in fostering the development of a money market - w hich in turn is a precondition for market-based implementation of mone tary policy. In reforming the payment system, some important policy is sues, especially the allocation of settlement risk, need to be address ed.