to continue, unless we collectively take action to address it. now, we know that the situation in the challenge is complex. the decline isn't driven by one issue or one cause ; it's a combination of factors. one important driver is that the volume of correspondent banking flows is relatively small in this region. it's a combination of small populations dispersed over far - reaching and diverse geographical areas, and it often encompasses very remote locations, and that makes it difficult for correspondent banks, or even potential correspondent banks, to achieve economies of scale. so that's one driver. a second important issue is that some countries have found it challenging to meet international regulatory requirements because they're small, they've got lots of competing demands on their resources, and that's challenging. and the regulations, we know that the bar is going up, so it's not easy. but we do need to find a solution to this issue. 1 / 3 bis - central bankers'speeches the withdrawal of correspondent banking relationships poses large risks to economic and financial stability in the pacific region at the household, the business and the government level. remittances, as we know, can be an important source of incomes for households. businesses rely on the ability to receive payments for exports, including tourism flows, which for many countries is very important. and governments also need to be able to import key supplies for their people and their nations. so maintaining the ability to send and receive these flows internationally is essential. i'd have to say, pleasingly, there are some green shoots. we at the bank welcome the initiatives by the pacific islands forum secretariat and the world bank, including the correspondent banking relationships'road map and the strengthening correspondent banking relationships project. we at the bank have met with the world bank's team several times to provide comments on the proposal and we're really pleased to hear of the progress that they've made to date. it's also encouraging to hear of the wideranging commitment from the pacific island countries to participate in the project – that's really important – and we look forward to future conversations with all of our pacific island counterparts and the world bank as this project progresses. now, in conjunction with development partners, there's also a lot of technical assistance and capacity - building initiatives underway, and some are planned in the region. at times, in the past, these projects have tended to be run in isolation and that's led to

. the development of these new services will require adjustment of the regulatory perimeter. thus, for example, the new payment services directive already covers new services not previously regulated, such as payment initiation and account aggregation. another case is that of crowdfunding platforms, which seek to put lenders and borrowers directly in touch with each other, without the need for banks – the traditional intermediaries. the development of these services and their resilience in situations of stress might require further adjustments to current regulations. 3. third, it is important that the price of services charged to the customer reflects their cost. currently, a large part of the technological improvements offered do not seem to have an additional cost for the user. for example, immediate access to data through mobile devices, automatic repetition of consultations every few seconds, or the dispatch of instructions or data requests en masse, are offered without any apparent cost to the customer. however, the new services do have costs and these must be clearly and transparently passed on to customers. 4. finally, it should not be forgotten that the benefits promised by new technologies are neither cost - free nor risk - free. there may be costs arising from investments in innovation that fail to bear fruit or from investments with payback cycles that end up being much longer than expected, as apparently may be the case, in principle, of some of the initiatives being developed in relation to distributed ledger technology. and risks relating, inter alia, to personal information privacy, fraud or cyber - attacks. in addition, the proliferation of new technologies may also lead to the financial exclusion of those users at a distance from them, who could be adversely affected if the continuity of service provision through traditional systems is not guaranteed. in short, we are facing great technological change in the banking industry, the effects of which are still not clear. the development of new services is a great opportunity for renewal for the more dynamic banks, as it may provide them with efficiency improvements and mean that they can offer greater services to their customers. and, improving customer service is precisely one of the main challenges facing the banking industry, which brings me to the final point of my address : the importance of maintaining the confidence of bank customers. 5 / 7 3 confidence confidence is the most important and the most fragile of a bank ’ s assets and determines the nature of its relationship with its customers, beyond the ambit of mere commercial transactions. bank customers deposit their savings with credit institutions, trusting that they will return