should supervise credit unions. some central banks already do this. at this time, we do not have the capacity to supervise the credit unions in fiji. government is thinking of setting up a financial services commission and we are suggesting that this commission be tasked with the supervision of financial institutions that currently are not supervised by the reserve bank of fiji which would include credit unions. financial sector assessment program fiji voluntarily undertook what is called a financial system assessment program or fsap for short. i am sure a few countries represented here have also done that. this fsap is a very comprehensive assessment by the imf and the world bank on the safety and strength of a country ’ s financial system including credit unions. i am happy to say that the general conclusion was that fiji ’ s financial system is sound. by the way the biggest country usa has not agreed to undertake a fsap. perhaps with the recent crisis an fsap for the us should now be taken urgently. let me quote you what the fsap said about fiji credit unions. “ fiji has long had an established credit union movement although the number of credit unions has declined from approximately 180 in the early 1990s to approximately 45 credit unions currently. the legal and regulatory framework for credit unions is outdated and the oversight by the registrar of credit unions is weak due to lack of staff and appropriate skills. there is dearth of information since no regular statistics are maintained but data collected in 2002 reveal a sector consisting of approximately 15, 000 members and $ 25 million in assets. in light of the inadequate data on the size and structure of the sector, the rbf has recently initiated an effort to collect information on the membership base and financial performance of credit unions. ” the fsap report clearly emphasised that the oversight of credit unions needs to be strengthened in fiji. we therefore need to start collecting data on the operation of the credit unions. unfortunately, we have not been very successful in collecting statistics which again reflects the issue of transparency and accountability of credit unions. we should really be updating the laws that governed credit unions. the legal and regulatory framework for credit unions is outdated. in updating these laws we should place emphasis on transparency, accountability and good governance. lastly where is the credit union heading in the future? are you going to continue with the tradition of consumer lending? should you be thinking more broadly on diversifying products and services to members? i believe that these are some of the key issues that you would need to deliberate on in

and internet banking. i believe that fiji is at par to what is offered internationally. it is critical that we in the financial sector are ahead of the wider economic reforms. it is inadequate for us to be following behind these reforms. in fact, we should be driving them. the complexities in the financial intermediation are increasing with the development of modern products to better suit the evolving demands of customers. inevitably, it is the central bank that takes a lead role in the modernization of the payments system because of its importance to the economy and the entire financial system. at the same time, such a system facilitates our work as custodian of financial stability. today, payments systems are the top agenda for most central banks. payment modes are wide ranging. cash is the common mode of payment. however, the inconvenience of carrying cash and increasing security threats has encouraged the move towards other payment media. but paper based instruments like cheques and drafts are not so convenient. in modern times, cards and electronic payments are regarded as the most convenient and safer instruments, although they too are subject to certain risks. some experts use the analogy of the “ plumbing design ” to describe payment system where nobody cares if everything is in running condition. however, if one of the pipes burst or the plumbing malfunctions, we will find ourselves in a wet and nasty mess ”. the manual payments system that we have used up to now has served us adequately. but it has its shortcomings. the major one is that it takes too long to clear cheques and this has implications on cash flows and financial performances. second, as i have said, carrying cash has its risks. thirdly, the cost of paper based instruments like cheques is relatively high in fiji adding to the cost of doing business. as i have said before, the smooth functioning of the payment and settlement system contributes to financial stability. with the introduction of fijiclear, where settlement of individual inter - bank fund transfers is on real time all throughout the day, a major source of systemic risk in the financial system has been reduced substantially. financial innovation fijiclear is now another instrument available in fiji to customers through which they can make payments to one another. the global trend is toward electronic real time payment system. world wide the financial landscape has changed driven by a number of factors including growth in financial markets, cross border flows, technological advancement in communication and information technology, changing macroeconomic factors, and globalization of markets and business