its rugged geographical terrain and sparsely distributed provinces which stand to benefit considerably from the use of electronic and mobile phone banking. the greatest challenge is to extend these services to the “ unbanked ” segment of the population who are mostly in the rural areas. in this respect a trade store in the remote part of papua new guinea could be an agent of this service and this could solve the everyday problem of a farmer who has to travel long distances and incurs high costs to get the required financial services in urban towns. role of bank of png section 7 ( c ) of the central banking act 2000 specifies that bank of png has to promote an efficient national and international system. in this regard, the bank welcomes the introduction of electronic payments and mobile banking products, which can assist in reducing transaction cost and contribute to the expansion of financial services in the country, particularly in the rural areas. whilst the bank seeks to encourage the introduction of new innovative instruments for payments, it also needs to ensure that high levels of standards are maintained for safety, security and cost effectiveness with adequate levels of protection for consumers ’ interests. in other words, the bank wishes to ensure that electronic payments and mobile banking instruments are appropriately regulated to mitigate any potential incidences that might give rise to systemic risk on the entire financial system. it is also important that the other legislations such as the proceeds of crime act ( pca ), information, communication and technology act ( icta ) and independent consumer, competition, commission act are also adhered to provide the necessary safety net for financial transactions. in this regard, the bank of png introduced its statement of intent on electronic payments and mobile banking in may 2010. it outlines the current views and approach of the central bank towards electronic and mobile payment services and sets out the measures which the bank intends to adopt in the future. this forum demonstrates the bank ’ s intention to work with our development partners in achieving the governments objectives of promoting financial inclusion, access to finance, and reduce the cost of banking that will lead to sustained economic growth. in this regard, the bank of papua new guinea has been actively involved with the development of microfinance industry, the mobile phone banking and payment services, and is now finalizing a project with donor partners to undertake a financial literacy survey and linkage program for the unbanked. these programs will see the introduction of a financial inclusion and literacy policy which will be submitted to the government for adoption, and development of a microfinance regulation

loi m bakani : the benefits of electronic payments and mobile banking products welcome speech by mr loi m bakani, governor of the bank of papua new guinea, at the mobile money workshop, port moresby, 10 august 2010. * * * acknowledgements mr. tilman bruett, regional advisor, pacific financial inclusion program ( pfip ), mr micheal tarazi, senior policy advisor, consultative group to assist the poor, mr waameek noor, alliance for financial inclusion, representatives from the adb, undp and world bank, ladies and gentlemen. introduction it gives me great pleasure to host this mobile money workshop at the bank of papua new guinea. this workshop is a follow up of the workshops in vanuatu, philippines and fiji in which three bank of png representatives together with our colleagues from other pacific islands central banks attended to learn about regulatory processes and operating environments as well as benefits of electronic payments and mobile banking products. the convening of this workshop is part of the programs on “ financial inclusion ” agreed to by central banks and finance ministers in the pacific, and is also consistent with the government ’ s increased focus on extending financial services to the rural areas of papua new guinea. this program was supported by the forum economic ministers meeting in raratonga, cook islands in october 2009, which stressed that measures should be taken by respective governments to strengthen advances in financial inclusion in their respective countries to reduce poverty. before discussing the benefits of mobile phone banking in papua new guinea, i wish to outline briefly the geographical and economic setting, financial sector innovations, and the challenges in papua new guinea. geographical and economic setting papua new guinea is characterized by rugged geographical terrain with many parts of the country inaccessible by road and fragmented markets which are separated by oceans and jungles. as a consequence, the provision of government services in the rural areas is scarce, if not it is non existent, and this has led to an absence of some basis services in the rural areas. some of the government services either absent or in very poor and deteriorating conditions in the rural areas include : inadequate infrastructure ; inadequate health services ; and inadequate educational services. these core inadequacies have led to : high infant mortality, pregnancy deaths, and deaths from curable diseases such as malaria ; low literacy and high unemployment levels ; poor accessibility to markets ; and poor accessibility to banking and other financial services. whilst the government has addressed and continues to focus on the structural issues in the previous