wilson kamit : current economic and financial conditions in papua new guinea speech by mr wilson kamit, governor of the bank of papua new guinea, to the western highlands provincial community, on the occasion of the bank board meeting, mt hagen, 15 june 2005. * 1. * * introduction representatives of the western highlands provincial administration, leaders of the business and civic sectors of the western highlands community, distinguished guests, ladies and gentlemen. on behalf of the board and officers of the bank of papua new guinea, i wish to express our great pleasure for us to be here and to have the opportunity to meet with you. many of you are no strangers to the central bank through the business liaison surveys you assist in. the members of the board comprise the governor as chairman, the two deputy governors, mr. benny popoitai, the deputy governor for management and operations, and mr. loi bakani, the deputy governor for policy and regulations. the members of the board ( ex - officio ) who are appointed in accordance with section 27 of the cba ( 2000 ), which specifies representation by various industry and community organisations are : mr. john mahuk, president of the png trade union congress mr. michael mayberry, president of the png chamber of commerce mr. kostas constantinou – managing director of the lamana hotel ms. betty palaso – deputy commissioner, irc there are three vacancies, the president of the png institute of accountants, the chairman of the securities commission and another appointee of the minister. the vacancy in the png institute of accountants was due to the death of the son of the western highlands province, the late mr patrick kolta. the bank of papua new guinea has only its head office in port moresby. we do not have branches in the other centers. as such, the only time we have the opportunity to visit provincial centres is through our business liaison trips, visits to provincial - based savings and loan societies, through special awareness / training such as on exchange control liberalisation, through special invitations to talk or make presentations at conferences, and through board meetings such as today. in the last seven years, we have had the opportunity to address conferences / meetings in mount hagen, kavieng, kokopo, goroka and lae without the board, and with the full board in lae, alotau, kavieng, wewak, goroka, and kimbe

possibly more – other major international currencies. second, the euro can only be assured of a major role in a multipolar currency world if the architecture underlying the single european currency is sufficiently strong. the task of achieving this cannot be delegated to financial markets and requires appropriate institutional steps. the euro in a multipolar world when the idea of the single currency was first mooted in the 1980s, the global economy was dominated by three countries : the united states, germany and japan. since then, the global economy has seen major changes. with the ongoing integration of global markets, we have witnessed the rise of emerging market economies. china, in particular, has led to a progressive shift in the centre of economic gravity and is expected to overtake the united states in terms of gdp at market exchange rates sometime from 2025 onwards. the us dollar has remained the main international currency, as a result of the predominance of us financial markets and also the inability of several emerging economies to pursue independent policies ( for example by de - pegging their currencies from the us dollar ). but there is little reason to believe that these factors will not change over time. the renminbi, in particular, should be in a position to relatively quickly emancipate itself from the dollar and become a major international currency if the chinese authorities were to consistently pursue capital account liberalisation, greater exchange rate flexibility and all related policy measures in the years to come. the international role of some other emerging market currencies is also likely to increase over time. we are clearly moving towards a multipolar currency world. the question is whether the euro will be one of the poles – so to speak – of the new system. i will not dwell on the advantages for europe of being one of the poles, but rather i invite you to reflect upon what would happen if it were not. to be sure, the euro, like any other currency, would be affected by economic and political developments in the countries issuing the leading reserve currencies, and would suffer severely from external shocks. consider, as an illustration, the recent experience of the swiss franc, a currency which is renowned for its stability. after the onset of the global financial and economic crisis the franc appreciated by 17 % vis - a - vis the euro in 2010 alone, driven by the reallocation of global capital on a massive scale. this has fuelled deflationary risks and slowed economic growth. to counter