world economy affects how we do business in the pacific. this was seen clearly by the recent global financial and economic crisis which prompted governments to come up with new laws and rules to safe guard banks and financial institutions from systemic risks. at this point let ’ s discuss some issues relating to the global regulatory trends. the world council of credit union ( woccu ) 2013 annual report, highlighted the following four issues as key challenges to the credit union movement, which are : 1. increased regulatory burden ; 2. payments innovation ; 3. young adult membership growth ; and 4. small credit union sustainability. those of you who attended the world credit union congress in gold coast may remember these issues being discussed. firstly, i see these challenges as the key areas that are driving the regulatory trend. since the global financial crisis, governments around the world have tried to push for credit unions to come under close scrutiny and regulation, which is good for the credit union credibility but can damage the movement. for example, pushing smaller credit unions, to report as per the international financial reporting standards ( ifrs ) for credit instrument impairment and basel iii requirements. this goes also for aml compliance. whist they are appropriate for bigger banks, they may not be for credit unions because the credit unions are established to bis central bankers ’ speeches promote thrifts and provide access to credit for provident purposes and are an alternative to the banks and financial institutions. therefore, it is becoming increasingly difficult for credit unions to serve their members when such laws and regulations are ignoring the business structure and size difference between credit unions and banks. however, if the regulation is streamlined to a model conducive for credit unions to grow, regulation of the sector will be beneficial in the long term. in png, we have taken the initiative to review the savings & loans society act in close consultation and input from the industry. the review of the draft s & l legislation has been completed in 2013 and has now progressed to parliament to be finalised and passed as law. it is our wish that the new legislation will assist the industry to grow and allow for the expansion of societies / credit unions in the long term. we must be committed to enhancing the credit union movement as much as possible particularly with regard to business lending and raising of capital, but at the same time we also need greater flexibility in order to serve our members. secondly, another trend the credit unions worldwide are embarking on is to address payments innovation, where credit unions venture into

the liberalisation be implemented? as mentioned, the liberalisation means the bank of papua new guinea will no longer be required to review, analyse and grant exchange control approvals. whilst it will not be a delegated function, the authorised dealers, which at the moment are the four ( 4 ) commercial banks operating in the country would have to process all transactions, including reviewing applications for foreign exchange transactions and ensuring tax clearance is obtained from the internal revenue commission ( irc ). the bank of papua new guinea ’ s emphasis now will be on the reporting forms from the dealers and other transactors for balance of payments analysis purposes. at the time the initial round of consultations took place with stakeholders, including the authorised dealers, many were not aware of the full impact of the liberalisation of the existing controls and their ability to handle it. the views expressed by the major stakeholders and business community, including the minister for finance and treasury during the post - announcement discussions is that whilst they welcomed this major reform, a cautious approach to stagger the liberalisation process should be followed. those were the reasons for the delay in implementing the proposed reform. it is my pleasure however to announce at this forum that the first aspect of this reform in the remaining controls on current and capital account transactions will be effective on 01st june 2005, except for the following controls : • approval involving private capital account contracts between residents and non - residents ; • approval to open and operate foreign currency accounts outside papua new guinea ; and • licensing of authorised dealers and gold exporters. these controls are still subject to the approval of the central bank as required under the foreign exchange & gold regulation. for those transactions that will be liberalised, they will still require tax clearance, which will now be the responsibility of the authorised dealers and the irc. prior to the effectiveness of the liberalisation of these controls, the bank of papua new guinea will undertake public awareness campaigns around the major centers of papua new guinea and hold further consultations with the major stakeholders. subsequent announcements on the liberalisation of the remaining controls will follow later on. we would like to work together with everyone concerned to ensuring the reform is implemented successfully. the exchange controls are a hang - over from the days of the fixed exchange rate regime. liberalising exchange controls would open up the economy, removing one of the administrative impediments to doing business in papua new guinea and assist in the government ’ s export - led growth strategy. our supervision of the financial system in