challenges and are taking measures to maintain their positions or space in the market. however, to do this, societies continue to seek the registrar ’ s endorsement to venture into these risky activities. we wanted to do away with that and therefore have proposed some legislative reforms to give boards and management more opportunities and decision making in operation of their institutions. bis central bankers ’ speeches 3. increased regulatory compliance in discussing the benefits of credit unions, i am mindful of the increasing need for regulatory compliance globally and we in the pacific are no different. ladies and gentlemen, i know you will agree with me that credit unions have evolved over time. there has been a lot of growth in the movement in terms of membership, the growth in asset size and how credit unions do business ( refer booklet by occul ). we cannot allow the movement to be stagnant, it has to be guided to adapt to global and domestically driven changes. in doing so, legislative reforms have to be made to enable appropriate and relevant regulation and supervision by the regulator. as we all know, the high demand for regulatory compliance increases costs. this is inevitable but one that should be balanced. increase in regulation can be due to a number of reasons : a policy change by government or the standard setters. effects of globalisation, for example the global financial crisis. technological innovation is becoming the order of business operations today and if credit unions are to survive, reforms should be encouraged to enable changes and enhancements to be made. technology is changing the landscape of the way business conduct themselves. for us in the pacific, the population is scattered throughout many small islands and into the rural communities, which makes provision of financial services and accessibility for these services very costly. technology like the use of mobile phones by credit unions will enable availability and accessibility of services to reach the rural majorities. thirdly, there is increasing trade across borders made possible by technological innovation and whilst it is good, it has its own risks such as money laundering, terrorism financing and scams. thus, regulation must be appropriate to govern them. questionable practices by those entrusted with the duty to manage credit unions resulting in enacting rules to correct those practices. topical issues today include financial corruption, insider trading, and conflicts of interest. 4. global regulatory trends ladies and gentlemen, the credit union sector in the pacific plays a crucial role in helping to meet financial, economic and social needs of our people. however since we are part of a global village, whatever happens in the

loi m bakani : the future of credit unions given the global regulatory trends speech by mr loi m bakani, governor of the bank of papua new guinea, at the pacific credit union technical congress 2014, port moresby, 6 november 2014. * 1. * * acknowledgements members of the occul board board members of credit unions in pacific distinguished guest speakers congress delegates ladies and gentlemen 2. introductory remarks let me begin by thanking occul for inviting me to speak at this congress on “ the future of credit unions given the global regulatory trends ”, from my perspective as the governor of a central bank in the pacific region and registrar of savings & loan societies in png. i suppose the greatest strength for the credit union movement lies in the model it is built upon which is based on the interdependence and mutual support by each other, the members. credit unions are all about financial inclusion. they provide services to their members who may be part of the working class, civil servants, or community based. credit unions provide services for small savers, big savers, small borrowers and big borrowers alike. even though our credit unions in the pacific vary significantly from country to country, in terms of the level of development, or maturity they are at and the applicable rulebooks, the challenges faced by practitioners and for regulators are similar. secondly, credit unions provide competition in the financial intermediation market and are some of the major players in the pacific region too. the credit union movement will have to continue changing with the times to meet its members ’ needs, to fend off competition, from other financial service providers to survive in a very competitive industry and environment. competition has its benefits. it forces the credit unions to be managed professionally and diversify and improve on the services it provides to its members. credit unions are another tier of financial institutions providing financial services like any other tiers of financial service providers. the products and services depend on how credit unions are structured in each jurisdiction. some operate almost like small commercial banks in a competitive environment, while others remain small, concentrating on fewer basic services for its membership. the sustainability of the credit union movement requires that credit unions get into increasingly riskier activities to survive in a highly competitive industry. in these circumstances, formal rigorous supervision will become more critical. from our experience, credit unions or savings & loan societies as they are referred to in papua new guinea ( png ), are increasingly aware of their own