medium-sized banks, it may be a threat. How should we advance systematization of such state-owned and small and mediumsized banks being very behind the times, whether to steer to a joint center system like Japan (joint banking centers for regional banks, joint centers for shinkin banks, etc.), whether we should promote reorganization by consolidation and abolition. This point is one of our challenges. The deployment of CBM-NET terminals to branches is another challenge to be considered. (C) Undeveloped settlement risk management Through interviews with CBM officials and FIs, we had the impression that an understanding of settlement risk was scarce in Myanmar, in fact, it seemed that the settlement risk management was not controlled strictly. For example, there is a settlement practice called the Link Bank Agreement (hereinafter “LBA”) among commercial banks. This is based on contracts between two banks and is a mechanism that enables remittances between two banks within the range of deposits made to each other in advance as collateral. As for problems on the settlement risk of LBA, there are risks associated with the transportation of cash deposits (we occasionally came across the scene where cash was put in a sack and carried in a light truck) and uncertainties as to how the LBA settlement finality is secured. (It seems that positions for a couple of days are cleared collectively.) In foreign countries, it is recommended to conduct interbank settlement on the current account at the central bank to reduce the settlement risk as well as PFMI is also recommending using funds settlement service, security settlement service and collateral management service that provided by central bank. However, the LBA and transportation of cash are remarkably opposed to that trend. CBM should encourage interbank settlement based on the current account at the central bank as a supervisory authority on settlement risk and as the administrator of the settlement system. It is also considered necessary to devise ways to raise incentives for this, such as improvement in functions and user-friendliness of CBM-NET, abolishment of commission for cash deposits and withdrawals, paying interest to excess reserves on the current account at the central bank, and other ways. As another example, there is also a problem of the settlement risk related to the central settlement at MPU and MCH. At present, the mechanism is to centrally 6