risk exposures. in indonesia, on the other hand, corporates borrowed off - shore directly in foreign currency and their such unhedged market exposure ( both currency and interest rate ), in turn, created credit risk for domestic banks that also extended from domestic currency loans. if only the above east asian countries like indonesia, malaysia, thailand and the philippines had contended with this, they would have preferred the continuous sensitivity of flexible exchange rate regime. after all, the chief merit of flexible exchange rate regime is that it admits of monetary policy autonomy / discretion / independence / sovereignty and insulates the domestic economy against the shocks of external / foreign disturbances. ( the example of external / foreign disturbances would be the appreciation of the us dollar because of the hike in the us interest rates to respond to its domestic compulsions ). as regards the down - side of the exchange rate volatility, the same should be allowed to be handled by institutional mechanisms such as well - developed derivatives market. ( indeed a recent study shows that there was no statistically significant negative effect of exchange rate volatility on external trade and investment after 1980s though, of course, it was found not to be so in the 1960s and 1970s. this happened due to wide - spread development and use of derivatives market in the 1980s and beyond ). interestingly, it is significant that the recent financial crisis, caused primarily due to the huge official capital flows into the rich industrial countries, especially the usa, affected, first and foremost, the usa and other advanced industrial countries with full capital account convertibility rather than emes ; it affected emes as well but only as “ an effect ” through the transmission channel of capital account, quite unlike the previous ones like latin american, russian, east asian crisis, where these countries were originally affected because of macro economic imbalances manifesting through capital account. from the foregoing, it conclusively follows that there is a very strong organic connect between open capital account and sound, robust and resilient financial system. for after all, even if global macro - economic imbalances and accommodative monetary policy provided an enabling environment for excessive leverage and risk taking, it was still the responsibility of regulators and supervisors to have taken appropriate macro prudential measures, preemptively and proactively, rather than reactively, to prevent such an apocalyptic event. the greatest good and the highest virtue, as it were, of an open capital account is not so much the

barry whiteside : microfinance initiatives in fiji opening address by mr barry whiteside, governor of the reserve bank of fiji, at the launch of the 2014 microfinance awards, reserve bank of fiji, suva, 2 june 2014. * * * fellow national financial inclusion taskforce members our valued sponsors of the microfinance awards : life insurance corporation of india and the pacific financial inclusion programme all our stakeholders in financial inclusion colleagues and members of the media ladies and gentlemen a very good evening to you all. it is with great pleasure that i welcome you all to the launch of our 2nd national microfinance awards. a number of us were fortunate to be present during the first awards presentation ceremony last october, which coincided with the pacific microfinance week conference in nadi. at the time we experienced the great excitement amongst our winners, but what was also gratifying were the emotions and sentiments shown by all the regional participants at the conference. the national microfinance awards is a special event in the rbf calendar. this is when we get the opportunity to pay tribute to the key stakeholders and recognise the valuable contribution that microfinance makes to the national economy. more importantly it is about recognizing and supporting our budding micro - entrepreneurs. i am pleased to learn from last year ’ s winners, that participating in the awards has helped them raise their strategies, goals and ways to improve and achieve a better future. furthermore it has inspired their respective communities, highlighting the hard work and discipline that is needed in keeping a small business running. at the reserve bank we are pleased to learn that as these micro - businesses have grown the business owners often involve their family members. this has provided valuable work experience, especially for their young ones. the extra income to the family translates into important advantages, including a chance for a better education. micro - entrepreneurs not only create a path to economic self - reliance but they also bring positive social and economic benefits to their local communities and the economy as a whole. we all know many examples of large successful companies in fiji today that started from very humble beginnings. in 2013, there were approximately 4, 200 micro, small and medium enterprises or msmes in fiji accounting for approximately 12 percent of our gdp or around $ 800 million. msmes, when given the right support, have the potential to lift the economy and can contribute strongly to employment, an issue which has been very much at the forefront of our development and growth objectives. i am pleased that the reserve