sada reddy : economic indicators and implications – where to from here? address by mr sada reddy, governor of the reserve bank of fiji, at the fiji institute of bankers ’ convention, suva, 23 october 2010. * * * introduction his excellency the president of the republic of the fiji islands, ratu epeli nailatikau, the attorney - general & minister for justice, anti - corruption, public enterprise, industry, tourism & trade and communications, mr. aiyaz sayed - khaiyum, the president of the fiji institute of bankers, mr. norman wilson, distinguished guests, ladies & gentlemen good morning and thank you for inviting me to speak to you on this occasion of the inaugural convention of the fiji institute of bankers ( fib ). the fib, which will turn 20 years soon, plays a very important role in the training and development of bank professionals in fiji. i must congratulate the fib for this excellent initiative in bringing together professionals and partners from the financial sector as well as stakeholders from the public and private sectors towards a common interest, that is, to establish a vision and strategic direction for the banking sector towards 2015 – the theme of today ’ s convention. i have great pleasure this morning to speak on the topic “ economic indicators and implications – where to from here? ” first i will provide an overview of the current state of the economy and its future outlook, before i move on to outlining the future policy direction for our economy. as bankers, we can attest to the prominent role played by financial institutions in the development of any economy. in fiji, the contribution of the financial sector to total real growth or total value added product of the economy is around 9 percent. as a measure of its size, total assets of the financial sector in fiji is around 180 percent of the country ’ s overall gross domestic product ( gdp ). this ratio has increased from about 150 percent five years ago and shows the increasing importance of the financial sector in our economy. in addition, the financial sector employs around 8, 800 people which accounts for around 7 percent of paid employment in fiji. an efficient and sound financial sector is essential for economic growth. the intermediation process which facilitates the transfer of funds from savers to borrowers, contributes significantly to raising investment, generating income, creating employment opportunities and supporting our economy. as someone said, credit is the oxygen on which businesses grow and survive. therefore, as would be true

doing good research : ( i ) first, there must be support from the top, and in our case from the central bank governors. without this support, any attempt to build a good research department will most likely fail. i would like to say that the presence of us governors in this conference is a testament of our support for research in our central banks. reserve bank of fiji for us at the rbf, two significant initiatives were implemented as part of our collaboration with griffith university. we have set up a research unit in our economics group with the aim to produce more research papers. selected staff are rotated to the unit as an opportunity to undertake research and produce working papers. in addition, the rbf now provides staff with a cash reward of $ 1000 if their research is published as either working papers or journal articles. ( ii ) second, there must be highly trained research staff and a system of measuring quantity and quality of research output. investing in the continuous development of our central bank staff is important and i know that a significant part of our central bank budgets is allocated to training and development. we must continue with this and have as a priority the need to build highly trained research officers. however, a real challenge faced by our small central banks is attracting and retaining research capacity and capability as many of our staff are so inclined to leave us for universities that pay more and conduct more research. more collaboration with academic institutions and research institutes such as the one we now have with griffith could help address this. going forward, we have to establish a system of measuring the quantity and quality of our research outcomes. credibility and quality of research is crucial and good evidence through a policy proposal supported by good research is highly likely to be considered for decision making. research must also be forward looking in nature to be relevant when the issues it addresses are faced by policy makers. ( iii ) third, there must be a productive and rich research environment for good research to be possible. one way to ensure this is making our central banks open to external research from academia, the fruits of which we are witnessing today through our collaboration with griffith university. there is room therefore for more collaboration, which brings me to the second key message that i wish to share today : 2. extending our research collaboration beyond the griffith university my second key message is that we should extend our research beyond the current collaborations with griffith university. our role as central banks has never been more important than it is today. we have the core responsibility to promote macroeconomic and financial