##pac corporate, business and personal banking managers for investment, business and personal loan services. real time gross payment system technological advancements have assisted in the modernization of our financial system. i must say that fiji is not too far behind the rest of the world in terms of financial technology and innovation. there is internet banking, telephone banking, atms and so on and these services have provided customers easier and faster access to financial services from the comforts of our homes and offices. westpac has been at the forefront of this innovation. i note that westpac was the first bank to introduce telephone banking back in 1999. in modernizing fiji ’ s financial system, i am pleased to inform you that fiji ’ s real time automated payments system is now operational. fiji is the first country in the south pacific to have such a state of the art payment system. we had a soft launch on 30 august and the system is working well. the system will facilitate faster clearance of cheques amongst banks. this was an important project that has spanned over five years and required a lot of collaboration with commercial banks. i take this opportunity to thank the banks for their cooperation, support and guidance. i am confident that this payment system will be the springboard to other modernisation of the financial system. the fiji economy let me turn to the economy. we have released our revised economic projections with a larger economic decline of 3. 1 percent this year compared to 2. 5 percent expected earlier. all economic indicators support this new forecast. there are some downside risks to this forecast. these include lower than expected tourist arrivals. what happens to tourism industry has considerable flow on effect to the wholesale & retail trade ; hotels & restaurants ; and transport & communication sectors. the other risks to this projection are the possible rise in oil prices and of course the weather. on balance however, i think that it is very unlikely that the economic contraction will be worse than what we have announced. monetary policy let me say a few words on monetary policy. as you know, we have imposed a ceiling on loans by commercial banks. however, we are allowing banks to exceed this ceiling only for lending to priority areas. this arrangement is working well for us. since the credit ceiling was imposed in december last year, the reserve bank has approved over $ 156 million of loans above the credit ceiling. most if not all of this increase is to the priority areas which we have agreed with commercial banks. this includes lending towards investment and to the micro, small and

campaign on financial literacy at the reserve bank of fiji because i believe that it lies at the heart of many things that we do like savings, spending, investment, microfinance, remittances and so forth. i know that there are many of these educations programs already happening. what we need to do is better coordinate these efforts. i hope we can bring in donor support for this national financial education program which should ideally start with our children. i would think that the credit unions are doing their bit to educate your members on savings, budgeting and living within their means. you will be surprised that budgeting is not practiced even by the educated and middle income people. if i were to ask you in this room if you do your budget i wonder how many would say yes. literacy is therefore extremely important. transparency let me get back to the issue of transparency. we hear a lot being preached about good governance nowadays which is excellent. as i have said, we at the reserve bank of fiji do not supervise credit unions. i have always wondered – who then supervises them in fiji? perhaps it is the registrar of credit unions on paper anyway? but whether they actually do any supervision is another matter. in our supervision of commercial banks and insurance companies we require them to be transparent. we require them to disclose their fees and charges. they also need to publish their audited accounts. directors and management have to pass the test of a fit and proper person. i am not sure whether this is being done to the credit unions. for instance do you publish your audited accounts? or if we apply the test of proper and fit person on credit unions today how many people will qualify? it appears to me that the problems that have arisen in the credit unions in fiji over the years have a lot to do with good governance. liquidity the other issue is liquidity. i again do not know the repayment ratio of credit unions. is it high? i know that the collateral are the members ’ savings. as a central bank we provide liquidity to commercial banks. but where do the credit unions go to when they need liquidity? is it to commercial banks? liquidity management is in my view the most critical issue with financial institutions whether you are a commercial bank, finance companies or credit unions. regulation the last issue is regulation. my view is that someone should effectively supervise credit unions. but the question is who. the reserve of fiji has been asked a few times whether we