difficult to put food on their tables. the environment has made achieving our vision a daunting task and the reserve bank has not been challenged with such intensity before as our problems seem to be compounding more in recent times. i believe that despite these challenges, the reserve bank has been able to manage these challenges over the years and more recently as well. i believe that the reserve bank has the leadership and capacity to overcome these challenges by working with the government and all stakeholders – including us all here today – to ensure better policy coherence and coordination to safeguard our country ’ s future. let us all take “ the next step together ” and “ lead fiji to economic success ”. it has been said that it is relatively easy to lead when things are plain sailing and that leaders are challenged most when things are tough. there is also a popular saying “ when the going gets tough, the leaders get going ”. when the situation gets tough and in a quest to be more competitive and survive, leaders will need to think “ outside of the box ” and move “ out of our comfort zones ”. major adjustments and paradigm shifts are required. creative thinking and in some cases unpopular policy decisions need to be implemented to address economic and financial challenges. it is however logical that change will be opposed and difficult to accept initially. there is a high premium on being level - headed, keeping emotions and feelings under control and being an optimist. i believe that a vibrant energy for “ hard work ” and taking tough decisions, being consistent and following through on these are some traits of a good leader leading in turbulent times. an effective leader is always optimistic “ even when the going gets tough ”, never a pessimist. an effective leader sees opportunities where others only see problems and continuously raises the bar for excellence in an organisation. an effective leader believes in his or her people and their potential and capabilities and imposes challenges beyond their limits to harness their creativity and talents. leaders not only need to be knowledgeable, they now need to inspire and lead a very knowledgeable and highly qualified team. general george s patton once said “ never tell people how to do things. tell them what to do and they will surprise you with their ingenuity. ” conclusion let me conclude and leave you with a few challenging thoughts in line with the theme of today ’ s convention “ people – key to economic success ”. 1. how can the institute contribute to capacity building and leadership for our nation? 2. how can

savenaca narube : reserve management in fiji opening remarks by mr savenaca narube, governor of the reserve bank of fiji, at the imf pftac workshop on foreign exchange reserve management framework for strategic asset allocation, suva, 17 september 2007. * * * dr susan adams, pftac coordinator resource persons ( jay surti from the imf, kristian flyvholm from the imf and, tørres trovik, senior advisor ( research ) and formerly senior advisor ( investment strategy ), norges bank ; board of trustees of the east timor pension fund. participants ladies and gentlemen introduction good morning, bula and welcome to fiji. let me thank the international monetary fund for bringing this important workshop to the pacific. i thank the resource persons and the workshop coordinatorsyou ’ re your contribution to this workshop. i thank you, the participants for taking time to attend this workshop. i am told that such a workshop is very expensive to mount as it is usually coordinated by investment houses. i am therefore glad to see so many participants from the region here today. reserves management reserve management, as you will no doubt know, is a complex set of processes, guidelines and strategies. they are made more complex by the financial crises that seem to be happening now and then in the global financial markets. the recent crisis on sub prime mortgages in the united states is a classical example. while this crisis appear to have a long tail, we are somewhat insulated from its impact by our fixed exchange rate and the narrow range of our allocation of foreign assets. you see for fiji we only have cash in our investment portfolio. this is not entirely by choice. while we have a benchmark of 60 percent cash and 40 percent bond we have not been able to replicate this benchmark. as a result, the average duration of our currency portfolio is well short of the benchmark. this is largely because of our difficulty in dealing with the flow on impact of valuation losses from falling bond prizes on our profit at year end. our valuation dilemma arose because of the accounting classification of our bond holding. while we had classified these as “ held for trading ” and we were marking to market, we were in fact holding these bonds to maturity. hence, by marking to market, we sometimes were booking unrealized losses on our bonds at the end of the year. we have resolved this by reclassifying the bonds as “ available for sale ”. our external