loi m bakani : financial planning for tomorrow speech by mr loi m bakani, deputy governor of the bank of papua new guinea, at the 2005 money show, port moresby. topic of discussion : creating a conducive financial system infrastructure for financial planning. * * * the minister for finance & treasury, honourable bart philemon, other government ministers, central bank governor mr. wilson kamit, members and directors of the port moresby stock exchange, invited speakers, ladies and gentlemen. the bank of png has participated in the money show since its inception, and as with the other sponsors, we see our involvement as an important contribution towards the education of our people in financial planning and investment. the money show has truly become an annual venue and source of education and awareness on financial matters. our participation is not only because of the unique position we hold in the financial structure of the country, but because the governing act, the central banking act ( cba ) 2000, also requires us to promote educational awareness, provide financial advice and ensure the safety of the financial system. in this regard, i, on behalf of the bank of png commend other sponsors for their continued support and participation in the money show. the theme for this year ’ s money show is - “ financial planning for tomorrow ”. speakers before me have and those after me will talk specifically on financial planning. what is it, why is it important, and how individuals and business enterprises can manage their financial resources and make use of various income - earning opportunities available. i will talk specifically on the area that is much closer to the activities of the central bank, that of ‘ creating a conducive financial system infrastructure to facilitate financial planning ’. the activities of the bank of papua new guinea, as most of you are aware, are governed by several legislations. these legislation include the central banking act ( cba ) 2000, the banks and financial institution act ( bfia ) 2000, the savings and loan societies act, and recently, the life insurance and superannuation acts. we can look at the financial system infrastructure from a legislative, operational and policy perspective : legislative let me first talk about the legislative aspect of the financial system infrastructure. i have mentioned the legislation that governs the activities of the central bank. these legislations were part of the government ’ s reform in the financial sector undertaken since 2000, which have given the central bank greater independence to perform its roles and objectives

. under the cba 2000 and bfia 2000, the bank is given the tasks of managing monetary policy, supervising the financial system and ensuring an efficient payment system that would contribute towards achieving economic growth. the life and superannuation acts were introduced to remove political interferences in these industries, and to ensure that these institutions are managed in a prudent manner to safeguard the interests of stakeholders, contributors and policyholders. all these activities are targeted at providing a stable, strong and vibrant financial system infrastructure, one that would amongst other things, assist in creating an enabling environment for financial planning. such an environment would, in the long run, contribute to the achievement of economic growth and create employment. increased independence given to the central bank means increased responsibilities. it also means that we have to be transparent and accountable on our decisions and actions. we have used these legislations to deal with problem financial institutions, those that are being mismanaged, as well as ensuring that only ‘ fit and proper ’ persons were managing them. our supervision of the financial system in papua new guinea, covering the banks, other licensed financial institutions, saving and loans societies, superannuation funds, and life insurance companies are to ensure that these institutions comply with the legislative requirements, use world ’ s best practices and have operational work ethics. operational i will now talk about the operational aspects of the financial system infrastructure. the central bank is entrusted with the role of maintaining a sound and efficient financial system. to strengthen our supervisory functions, we have introduced new prudential standards for the licensed financial institutions, based on international best practices and consistent with the basle standards. the people tasked with managing these licensed financial institutions have a demanding, challenging and responsible role to perform. therefore, the corporate governance structure is one of the requirements that the central bank has continuously emphasized to ensure only “ fit and proper ” persons are appointed to the boards and management of these institutions. corporate governance is the key to strengthening efficient internal controls, risk management and reporting systems. as a result of these reforms and standards, the financial system is generally stable and functioning reasonably well for a thin system with only a few large institutions. overall, there is adequate level of capital maintained by the banking sector ; asset quality has been improving which is consistent with the improvements in the economy ; liquidity remains high ; and posted earnings continue to be favourable, especially for the major banks. this has provided a strong foundation for the growth and management of our financial institutions, as indicated by recent