sir k dwight venner : the eccu economic review 2005 presentation by sir k dwight venner, governor of the eastern caribbean central bank, at the eccb headquarters, st. kitts, 12 january 2006. * * * good evening fellow citizens of the eastern caribbean currency union on behalf of the monetary council, board of directors, management and staff of the eastern caribbean central bank, i bring you greetings and best wishes for the new year. i welcome this opportunity, once again, to address you on the economic performance of the currency union during the past year, and to share with you the bank's views on the prospects for this year. the year 2006 will be one of the most defining periods in the lives of the people of the oecs and the wider english speaking caribbean. the reason for this is simple. it lies in the wide variety and great intensity of the challenges we will face as very small states in a rapidly changing regional and international environment. there will be tremendous challenges for us in how our political, economic and social institutions exercise their capacity to respond to new and unexpected circumstances in a global environment, in which each national entity places its interests before those of others. in fact, recent circumstances, most notably the negotiations on access for our bananas into the european union clearly indicate that our small size does not evoke much sympathy in international economic relations. this should make it abundantly clear to us that we need to proceed into the future with an increased sense of realism, objectivity and clarity. it is, therefore, perhaps more than symbolic that in 2006 we will be celebrating the 25th anniversary of the signing of the treaty of basseterre. this treaty of cooperation between our countries has been in very large part responsible for their survival and growth over the intervening years. it is also important to note that we have been working on revisions to the treaty, and that these will reflect our considered responses to the changes which have been taking place in the domestic and external environments. the year 2006 will witness some very specific events and circumstances which will require new and strategic responses from us as individuals, families, business firms, trade unions, civic organisations, countries and as a closely connected group of countries, that is the oecs. the major challenges in the international arena will come from the new trading regimes which are now being negotiated under what is called the doha round. the major issues involved would be liberalisation in the trading of agricultural commodities and services. these will have a major

level through a shared payment infrastructure, while individual players compete at the product level by developing innovative value - added features. this approach is envisioned to expand the network reach at a lower cost, while promoting competition in areas that advance financial inclusion, higher service levels and the delivery of a superior customer experience. there are clear synergies to be gained from such collaborative efforts. they enable technological infrastructure to be shared across the industry. this shifts the competitive focus towards improving the value created for customers and the economy at large, rather than a race towards building proprietary networks that ultimately leads to market fragmentation. however, the effect of this is also a sharp laser focus on bottlenecks within individual firms. by levelling the playing field, firms will face a greater urgency to address internal constraints that prevent them from capitalizing on opportunities for higher growth and productivity. this may well be the most important challenge for digital leaders. elevating the quality of financial sector growth this brings me to the quality of financial sector growth. there are two perspectives to this. first, digitisation offers enormous potential for the financial sector to achieve what was not possible before, at least not without prohibitive costs. and second, the transition to a digital economy itself calls for a re - orientation of the financial sector to meet the new business demands for financial services. on both counts, the financial industry can, and in fact ought to be, powerful agents of change. with a little ingenuity, digital finance can unlock new growth opportunities that were previously deemed to be not commercially viable. indeed, disruptive innovations – whether in banking or beyond – often begin at the fringes of the market, such as the underserved and unserved segments. the much - lauded success of m - pesa in kenya is a shining example of this, where the humble mobile phone was transformed into a bank account for millions of people who were otherwise excluded by the financial system. we have our own success story in malaysia with agent banks that were made possible with technology. through the vastly expanded network of access points at a fraction of the cost involved to set up a branch, over 30, 000 individuals who did not have bank accounts before now have access to banking services through agent banks. this is just the tip of the iceberg, with considerable potential that remains untapped – to achieve full financial inclusion with access to bank accounts for all malaysians ; to make it easier, through psychometric and big data analysis, for businesses that have no track