The Central Bank of Bahrain (CBB) has introduced a uniform set of cheque standards and specifications for designing and printing of cheques, which are processed through the clearing system. CBB has said that from now onwards there will be only one standard size for all cheques. The standardization of the size of the cheque is expected to help speed up the cheque clearing process and increase efficiency of cheque clearing, storing physical cheques as well as archiving cheque images.
CBB has added that banks have to adopt the new standards and specifications for their next cheque printing order. In order to ensure smooth transition to new design cheques, CBB has given a five month period for them to make the required changes to their cheque designs. All cheques issued to customers after 1st January, 2010 must comply with these standards and specifications.
Salman Bin Isa Al-Khalifa, executive director of banking operations at CBB, said: "Introduction of a uniform set of standards and specifications for cheques is a major step towards increasing efficiency of the current cheque clearing process and modernizing the cheque clearing system."
Analyze this situation through the lens of supply and demand. Please comment on these questions:
- What will this new regulation do in the banking market? Why?
- What are the MSB and MSC in this case? Is MSB>MSC? Why or why not?
