offset the constraints imposed by the small size of the local market. of course, this very expansion has opened the financial sector in trinidad and tobago to potential risks because of the greater income volatility of some of our caribbean neighbours. not unexpectedly, the expansion of the financial system and the emergence of new and liberal structures are proving to be a tremendous challenge for our supervisory authorities whose responsibility it is to ensure that institutions take adequate steps to manage exposure to systemic risk. accordingly, the central bank is currently working on amendments to the financial institutions act which, inter alia, will give the bank the authority to : ( i ) conduct consolidated supervision of conglomerates ; ( ii ) facilitate a better focus on cross - border risks ; ( iii ) allow the regulator to prescribe system - wide capital adequacy levels ; ( iv ) make mergers and acquisitions subject to the approval of the central bank ; and ( v ) authorise the exchange of information with other regulators both locally and regionally. ladies and gentlemen, over the past few years, in the context of a lower interest rate environment, mutual funds ( or as they are formally called, collective investment vehicles ) have assumed an evergrowing presence on the financial landscape of trinidad and tobago. as mr. benn has noted, the utc established the first mutual fund in trinidad and tobago in 1981, but since the opening of the mutual fund market in 1993, subsidiaries and affiliates of commercial banks have become major players in the mutual fund market. [ in 1981, the local mutual fund market started with $ 25 million under management, invested in equitybased and money market funds. today the mutual fund market has in excess of $ 24 billion under management with resources invested in equities, debt and real property or hybrids of these, as well as money market instruments. ] the growing importance of mutual funds as a savings vehicle is highlighted when compared with what is happening in the commercial banks. in 1997, commercial bank deposits amounted to $ 14 billion while mutual funds totalled $ 3. 3 billion. however, by 2003 mutual funds accounted for $ 20 billion, while commercial bank deposits accounted for $ 23 billion. the data clearly indicate that over the period, the rate of growth of mutual funds was significantly higher than that for commercial bank deposits. there are no indications that there will be an abatement of the growth of the mutual funds sector. in fact, it is becoming evident that mutual funds are quickly becoming the preferred form of investment in trinidad and tobago

in paper mode, is the industry geared up for such changes? is there a specific plan to go paperless by these service providers? interoperability also pre - supposes a central infrastructure for clearing and settlement. we have already permitted transfer of funds from a fully kyc compliant ppi issued by a non - bank authorised entity to a bank account through the sponsor bank route riding over the banks membership with nfs, npci. why is such a fund transfer not picking up? in our vision document we have discussed about the need for collaboration and co - operation between payment system operators. what is level of co - operation amongst the ppis issuers? have there been any efforts to collaborate at least on boarding of merchants? is there any effort to standardize the merchant code and enable all the ppi issuers once approved under the pss act, to have access to all the merchants? has the industry deliberated how collaboration and co - operation could be achieved in the three party model to increase the scale and volume of transactions? arriving at a consensus on these issues will increase the acceptability amongst the customers as they will have a wider choice of ppis and will help achieve the objective of increasing the cashless transactions. kyc related issues several requests for liberalisation of kyc requirements have been received from the industry. several schemes in other countries which are operating in a relaxed and liberalized kyc environment have been cited. we are also aware of the use of ppis for disbursement of government benefits in some countries. before sharing with you what we are reviewing, let me sound a word of caution. how many of you have read ravi subramaniam? more bis central bankers ’ speeches specifically, how many of you have read his book “ the incredible banker ”? can we draw comfort that, what ravi describes is mere fiction? the underlying message is clear. competition cannot degenerate into the race to the bottom! relaxation cannot be confused with abdication. if you are allowed to travel fast on a newly laid road, it does not mean that you have unbridled freedom to close your eyes and drive! now let me turn to what we are trying to review. in our vision document, we have committed that the ppi guidelines would be reviewed to provide further impetus to the industry. but it needs to be appreciated that closer the ppi gets to a bank account, the greater the need to apply the same set of kcy / aml regulations which