in the past. we also hosted a workshop on this topic in 2013. as i see your workshop agenda, i appreciate that you are going to discuss the timely issue of sovereign exposures in emerging markets. the reasons for the high share of government bonds in commercial bank assets in emerging markets are clear and straightforward. financial markets in these countries are still under development and shallow, which is limiting their ability to diversify assets. banks can also choose to be exposed to sovereign debt in some countries as the alternative ( private lending ) is riskier given existing legal and institutional imperfections. finally, the current regulatory setup gives preferential treatment to sovereign exposures, as banks ’ exposures to domestic government in domestic currency are subject to low or even zero risk weights. 1 / 2 bis central bankers'speeches while banks ’ sovereign exposures in advanced countries are considered to hover at reasonable levels, exposures in many emerging market countries are significant. the current level or its buildup is becoming a relevant concern to emerging market countries, mainly owing to credit and concentration risks. as the sovereign debt crisis in europe showed recently, the zero risk weight commonly applied to sovereign exposures in domestic currency might not be fully consistent with empirical observations of the risks of sovereign debt defaults. hence, the default risks of sovereign issuers need to be reflected accurately in risk weights to ensure that banks have appropriate ex - ante incentives to take on such exposures. besides credit risks, excessive sovereign exposure concentration reinforces the link between sovereign and banking sector stress. in fact, the close relationship between sovereigns and banks is seen as one of the major reasons for the severity of the eurozone crisis. therefore, breaking the sovereign - bank nexus is needed in order to strengthen macroeconomic stability. nevertheless, our prudential treatment of sovereign exposures needs to strike a balance. it has to bear in mind the specific role sovereign debt plays in financial markets. government securities are used by central banks as collateral in managing market liquidity and implementing monetary policy through money market operations. furthermore, given their low risks, they are used by banks and pension funds as investment instruments. these aspects need to be borne in mind when designing prudential treatment of banks ’ sovereign exposures. this is particularly true of emerging and developing countries, as their financial markets are shallow and low - risk equivalents to government securities and central bank papers are hard to find. as i have already mentioned at the beginning of my speech, the cnb hosted the bc

sada s reddy : fijian business – on the edge presentation by mr sada s reddy, governor of the reserve bank of fiji, to the fiji indigenous business council, suva, fiji, 23 june 2010. * * * the chairman of the fiji indigenous business council, distinguished guests, ladies and gentlemen good morning i am very honoured to be invited to speak to you this morning. i have been requested to speak on the theme : “ fijian business : on the edge. ” well, when i looked at the topic, a number of things came to my mind. first of all, what does a fijian business mean for instance ; and secondly why “ on the edge ”. let me first deal with what a “ fijian business ” means to me. i presume it means any business venture that the indigenous people of fiji own and operate as distinct from business ventures owned and operated by the rest of the people of fiji, including foreign investors. if my understanding is correct then i need to ask why is that you wish to distinguish fijian businesses from the rest of fiji businesses. i guess this is where the challenge comes. for your council to form an association to represent the indigenous businesses itself shows that you have seen the need for such a body to address some of the opportunities and challenges you collectively feel need to be addressed. so what are these challenges and needs? i have to confess i have not had the opportunity until today to discuss with anyone of you to really find out what exactly are the aims and objectives of the fiji indigenous business council. but i have closely followed, through various media, the activities of various business associations including your association, over the years and therefore have some idea about what these associations ’ aims and objectives are. i guess one of the key issues your members have to deal with is how to grow and compete with existing businesses. this in itself is a very difficult and complex issue. when you look at some of the successful fiji businesses, you will find that they have all had very humble and small beginnings. some started off with corner grocery shop and over say two to three generations of hard work, personal and family sacrifices, enormous discipline in managing money, building up saving and making prudent business decisions, managing business risks, developing strategic business alliances, but more importantly having a passionate vision and working day and night to achieve that vision. there is no short cut. most of the successful businesses you see today did not get any government help in the initial years