sada reddy : information exchange on microinsurance in fiji speech by mr sada reddy, governor of the reserve bank of fiji, at the “ information exchange on microinsurance ” in fiji, suva, 15 july 2010. * * * it is a pleasure for me to address the opening of this “ information exchange on microinsurance. ” first, let me extend a warm welcome to you all. tonight we have gathered leaders from the private and public sectors together in order to discuss an important topic in financial inclusion – microinsurance. from the ceo ’ s of insurance companies, to rural cooperatives of farmers, everyone here has a part to play in the development of this field, which will help create a more stable and secure fiji. as you all know the reserve bank of fiji continues to partner with key stakeholders of financial inclusion like the pacific financial inclusion programme ( pfip ), to extend financial services and financial literacy to rural and low income people around fiji. this event is another example of this strong partnership and represents some of the wonderful progress we have made together over the last year. the national financial inclusion taskforce turns five months old in three days, and has already been displaying some impressive results. exactly one month ago, nfit brought vijay mahajan, founder of basix bank and chair of the cgap executive committee to provide insight on the status of financial inclusion in fiji. further at the end of last month the asian development bank presented a comprehensive report it completed on the same topic to nfit. the report made obvious some areas in which we need to make reforms, and also offered some clear guidance on paths we can take moving forward. one issue the report exposed was that we currently have no standardized reporting format for microfinance, which means financial transparency is very low. in order to increase the transparency of microfinance institutions, and facilitate better performance monitoring standards, rbf and pfip collaborated to provide financial reporting training to 35 people here in fiji at the beginning of this month. this is an important step to building the local capacity here now, to ensure that microfinance initiatives in the future are both stable and sustainable. further, the nfit working group on financial literacy has designed a strategy and is busy implementing financial literacy into the national curriculum here in fiji, so all our children will have the basic understanding of money management they will need to succeed. scoping is also being done by pfip to conduct a national baseline

gdp declined to the lowest level since the early 1990s. in connection with the structural adjustments, as chart 4 shows, progress has also been made in reducing nonperforming loans. as far as major banks are concerned, they as a whole seem to be hitting the march 2005 target, namely, lowering the share of nonperforming loans in total credits to half of that in march 2002. of course, japan ’ s financial institutions are still facing quite a few problems. in this regard, they should step up their efforts to reduce nonperforming loans and contribute to corporate restructuring. and they should be well prepared for the removal of the blanket deposit insurance, which is scheduled for april 2005. as the structural adjustments have progressed, an opportunity for sustained growth is finally arising. in order to turn this nascent opportunity into full - scale revitalization of the economy, both the private sector and the government should work harder. ii. conduct of monetary policy on the part of the bank of japan, we continue to maintain the monetary conditions which should help deflation come to an end. chart 5 shows that deflation has been easing but the year - on - year change in the consumer price index ( cpi ) has not yet reached positive territory even with the help of upward one - off factors including a rise in rice prices. based on the assessment that the underlying trend of the cpi is still moderately negative, the bank is conducting an extremely accommodative policy with three features. first, the bank is providing unusually ample liquidity to financial markets. the so - called “ quantitative monetary easing ” keeps short - term interest rates at almost zero, thereby ensuring the stability of financial markets, which in turn supports economic activity. second, the bank is conducting its policy with the commitment to continue quantitative easing until deflation ends. the resultant “ policy duration effect, ” by working on expectations about future monetary policy, contributes to further stabilizing financial markets. third, the bank is making efforts to enhance the transmission mechanism of monetary easing. for instance, the bank has already been expanding the types of money market operations. moreover, the bank is eagerly communicating with market participants and other authorities as to how to expand the securitization market. of the three features of the current monetary policy, let me elaborate on the second one : the bank ’ s policy commitment. in this commitment, the bank will maintain quantitative easing until the core cpi registers stably zero percent or an increase year - on -