consumer durables and capital equipment that followed the loss in confidence and reduction in the availability of credit. rigorous inventory control then propagated the fall in demand rapidly along globalised supply chains. now producers cannot run down inventories indefinitely, so the rate of contraction should start to ease as de - stocking slows. and indeed, business surveys around the world do suggest that the rate of contraction in activity has been moderating over the past few months and that business confidence has started to improve. so the bottom in economic activity may not be too far off. unfortunately these encouraging signs – i hesitate to identify them as “ green shoots ” – do not tell us much about the strength and durability of the subsequent recovery. here there are reasons for both caution and optimism. the main reason for caution lies in the nature of this downturn. previous uk recessions were associated with the need to reduce inflation after a period of excess demand growth. but the period preceding the present crisis was not associated with excessively rapid growth in the demand for goods and services. instead, it was characterised by excessive growth in the demand for financial and real assets, and in the prices of those assets. all of that went into reverse after august 2007, with a sharp reversal in perceptions of risk, falls in asset prices, a deterioration in banks ’ balance sheets, and a drying up of credit. the senior warden, in his introduction, drew attention to the harm that the reduction in the availability of credit is having on otherwise viable businesses in this part of the country. we hear the same message repeatedly across the nation through the business contacts of our network of regional agents. the issue is very much at the forefront of our concerns. the uk government has already introduced a range of measures to underpin the banking system, including requiring the injection of additional capital, guaranteeing bank debt and providing insurance against losses on some of the risky assets on banks ’ balance sheets. that has served to stabilise the banking system. but we are still some way from having banks that feel sufficiently secure that they can lend normally, and investors that have enough confidence in the banks to provide them with sufficient funds. the bank will continue to work alongside the government and the fsa in trying to ensure an adequate flow of funds to business. unfortunately, past experience in other countries suggests that it often takes time for the banking system to mend after a crisis, and it is possible that the supply of credit will remain impaired for some while. there

##ance sector, the bank does not at all compromise its primary roles and responsibilities. all licensed financial institutions, including microbanks and licensed microfinancial institutions are expected to fully comply with the regulatory and prudential requirements of the bank. protection of public deposits and stability of the financial system are at the centre of the bank ’ s objectives. for these reasons, we continue to enforce good governance in both the board and management level, through the “ fit & proper ” tests for those involved. the bank will not go easy on licensed institutions that are found to be violating the provisions of the various acts that empower it or the prudential standards and directives of the bank. challenge : translating rhetoric into reality we can make speeches, write policies and attend conferences to address the needs of the informal and semi - formal sectors but if these are not translated into reality, those that are supposed to be helped will continue to remain in their backwardness. this is a challenge, not only for the government but, for all stakeholders to consider. the png - adb microfinance project is spear - heading the microfinance development in png. i welcome and encourage the pacific participants to interact with your png counterparts to learn and get as much information as possible from this conference to help you develop your microfinance sectors. acknowledgement i would like to acknowledge the contributions of our development partners through the project. one of the components of the project is the microfinance competence centre ( mcc ). i would like to thank the team members of mcc for organizing this conference and inviting participants from the pacific region to attend. closing in closing, i believe this conference opens up the way for all to share information and ideas to address the common problem of poverty alleviation and rural development through microfinance. in this respect, i wish you all success in your deliberations over the two ( 2 ) days of the conference. thank you very much.