entirely rely on rating agencies and their objectivity is being questioned. the second issue is that of liquidity. central banks are scrambling to pump liquidity into the market. this is very much uncharted waters to many central banks. the numbers are mind boggling. the us is now talking of a rescue package of 700 billion dollars – the largest in history! we central bankers now have to think and operate well outside the box. the us federal reserve is now supporting institutions that it does not regulate! the fear is that this rescue package in the us may not be enough. lastly, there is the issue of regulation. how much should we regulate given the lessons that we have learnt. some are advocating that we look at more regulation. i do not subscribe to this view. what we need is perhaps a new set of rules for disclosures and transparency. the us financial market is the key to global financial stability. whatever happens there send ripples across the world. to me the fundamental problem is that the financial markets in the us and europe to a lesser extent seems to have an artificial life of their own. i would like to think that the financial system is simply a conduit for real economic activity. up to now i think that the asian and particularly the pacific financial markets are somewhat insulated from these developments and thank god for that. but this may not be true anymore. most of our commercial banks are branches of australian and new zealand banks. a few weeks ago, the reserve bank of new zealand had to make a public statement reassuring the people that its financial markets are safe and sound. while we will need to talk more with the commercial banks in fiji, i agree with governor bollard that the financial markets in the pacific are safe and sound. i would like to reassure the people of fiji that our financial system is sound. now, while we are somewhat insulated from the direct effects of the global financial turbulence, we will not be so lucky in facing its indirect effects. the financial turbulence has come at a time when the us economy was already weak. so its economic backlash will further slow the economy. as the us economy slows it has flow on effects to the rest of the world including asia and the pacific. worse still, the crisis has come at a time the price of food and oil has risen and inflation across the globe is a concern. the slowdown in growth and higher inflation is a lethal combination one that was experienced in the great depression. is the

were unable to borrow, but were able to do so through the credit union solution. therefore since its conception credit unions have been synonymous with meeting basic needs and improving the livelihood of its members. i believe that this continues to be the case. and there is nothing wrong with this. it is still very relevant today. what have changed would be the greater diversification in living standards of your membership and the greater diversification of financial services and products. the challenge therefore in my view is – should the credit union still play this basic role given the diversity of its memberships and the dramatic development of the financial services and products. we now have more specialized financial services. the customers now have a lot of choices of where to get services from. in such an environment what comparative advantage does credit union offer? what is the credit union doing to address this challenge? i have the view that there is a lot of work to be done. some have pointed out to me that out to me that the most unique feature of the credit union is the “ common bond ” that links its members. my knowledge of credit union in fiji is that they are established along employment or religious lines. are they still relevant now? i am sure they are! but you pool a lot of very hard earned savings. what returns are you giving to these hard earned savings? what security do you provide to these savings? this brings me to a fundamental question – do members join a credit union to save or borrow? i note that the credit union league in fiji has added the word “ savings ” to its name. it will be interesting to see how many of your members retire on a credit side of the ledger rather than a debit. my suggestion is that you should push equally from both sides. savings must also be emphasised and perhaps you are doing that already. is there possibility to package your savings in different products to encourage long term savings? on the lending side, my understanding is that your loans are for short term and basically for consumption. i always see a lot of people in credit union offices at certain times of the year like christmas or before the start of the school year. so you tend to satisfy short term cash flow needs. this is fine. but is there scope for lending for loans for more productive purposes like to start small businesses? financial literacy that ’ s brings me to the important issue of financial literacy. my view is that we in fiji have not done enough to promote financial literacy. i have just recently begun a