philip h penn : enhancing and strengthening banking supervisory capabilities in pacific countries opening remarks by mr philip h penn, acting governor of the central bank of samoa, at the pacific regional banking supervision seminar, apia, samoa, 23 - 25 october 2007. * * * mr andrew milford, banking supervision advisor from the pacific financial technical assistance centre ; distinguished resource persons ; ms elizabeth roberts, director of the financial stability institute ( fsi ) ; messrs graham johnson and chris gaskell from the australian prudential regulatory authority ( apra ) ; mr kim norris, director, international advisory group, osfi, canada ; deputy governors ; participants ; ladies and gentlemen. as the host for this year ’ s regional seminar and the annual meeting of the association of financial supervisors of pacific countries ( afspc ), i am very pleased and honored, on behalf of the governor and staff of the central bank of samoa, to extend to you all a very warm welcome. we are very happy to see and meet again some familiar faces. and for those of you who are here on your first visit, a special warm welcome to samoa and we hope you have time to spare to enjoy the paradise of the pacific. you have certainly arrived at the time when the streets of apia are back to normal as compared to a few weeks ago when we experienced unusual busy traffic due to the influx of tourists and overseas sports people, who came to enjoy and participate at the 10th south pacific games which we hosted last month. with due respect to our friends from the pacific, i am very pleased to mention that these games was a great success and an extraordinary achievement for our country and for all those who attended. i understand that some of you were very keen to hold this seminar to coincide with the games. but i guess the potential risk from a prudential supervisor ’ s view of losing participants during the two weeks of the games may be considered critical and detrimental to achieving the objectives of our seminar. that aside, the central bank of samoa is very grateful for the opportunity to be co - hosting this years ’ event with the financial stability institute in basel, switzerland ; the pacific financial technical assistance centre in suva ; and the association of financial supervisors of pacific countries. this seminar is part of a continuing series of trainings which could only contribute towards enhancing and strengthening our capability as supervisors in the development of our economic and financial systems. this is indeed a great opportunity to learn and share issues of common interest, in particular, the potential risks

to start worrying about an accountant spending it on my behalf! we have just witnessed the awarding of certificates to those who have passed their “ final qualifying exams ” ( or fqes ). and, later on this evening, we will also witness the induction of new members into the samoa institute of accountants. on behalf of everyone here tonight, i wish to congratulate all of you on the achievement of these important milestones in your education and career lives. you have continued to make your families both proud and happy. but, i caution you, this is only the first step in your careers as accountants. remember, “ it is not what you learned, but how you use what you learned, that counts ”. i came across a definition of an accountant the other day. it said, “ an accountant is someone who solves a problem that you did not know you had, in a way that you don ’ t understand ”! i hope that tonight ’ s graduates do not end up being one of these accountants, who creates a problem first and then pretends to solve it. and, worse still, they end up charging the client for something that was not there in the first place! it ’ s almost like being a lawyer! the recent global financial crisis started from a liquidity shortfall in the united states. this liquidity shortfall resulted from many loans ( especially for housing ) going into default, and there were insufficient assets to cover these loans. as a result, many large banks and financial institutions went bankrupt. and, if it were not for the quick and substantial intervention by some major governments and central banks, the global economy would have collapsed. among others, the accountants have been blamed for the “ financial crisis ”, as a result of their “ creative accounting ” techniques, which contributed to inflating the values of the assets which were used as collateral for the many risky loans that were issued. as well, the ability of many accountants to hide a substantial volume of very large transactions “ off the balance sheet ”, contributed to the demise of many of these large financial institutions. i mention this to highlight the critical roles that accountants can play in maintaining financial stability in national economies and thereby the global economy as a whole. the stable economic environment that samoa has enjoyed over the past many years is also partly due to the responsible way that the members of the samoa institute of accountants have carried out their duties. and, i commend and thank you all for that. let me