##bankable to be engaged with in banking business – this perception turns always many from participating in banking activities ; – and many other factors as a result of these and many other contributing factors ; the rural economy of png, where the bulk of the population is, is largely a non - monetized economy. there is no formal and continuous access to any form of banking services to the rural areas. financial inclusion – recognized as remedial tool for development to address this gap in our national economy, the theme : “ financial inclusion ” has taken the forefront of all our efforts and activities. in the recent past we have seen a diverse range of players playing their parts in promoting financial inclusion, such as microfinance institutions, commercial banks, savings and loan societies, telecom companies, community based organisations, and faith based organisations. i now want to briefly mention the establishment of mep. microfinance expansion project mep is a project launched in april 2012, jointly funded by adb, australian agency for international development ( or ausaid ), and gopng. the bank of png is the executive agent. the central theme of mep is to establish an institution for financial inclusion, which will spear - head all key activities and hopefully bring all the efforts of diverse players together to achieve our objective of total financial inclusion for all. this is basically the reason why we are here today … …. to witness the launching of cefi. cefi as the chairman of this nascent institution, let me take you through the vision and mission with which cefi has been constituted. cefi has been formed with the vision to “ eliminate financial exclusion for poverty eradication in papua new guinea and expanding activities in the pacific region ”. this entity aims to work with the mission to “ promote excellence in financial services, innovate delivery channels, and facilitate financial education ”. mep has an overarching goal of enhancing financial inclusion by extending financial services to the bulk of the rural population in png. a key deliverable of mep is to set up the cefi. cefi is the entity that will take forward the project initiatives after the completion of the project. these includes : • cefi will partner with strategic stakeholders and will be the implementing agency for the national strategy for financial inclusion. cefi ’ s efforts will be a major step in achieving the objectives of vision 2050, the medium term development plan 2012 – 2017 and the government ’ s policy focus on service delivery to the

, morobe province, which the bank of papua new guinea licensed in 2004, is showing strong signs of growth by expanding its micro - finance operations into the city of lae after one year of commencement. these initiatives are not in direct competition with the existing financial institutions, but are seen as complementary to the financial system. foreign exchange control liberalisation let me touch on the bank ’ s decision to remove the remaining controls on foreign exchange. the first question many may ask is the obvious one : why liberalise the exchange controls? the rationale as i have stated is to allow for a smoother flow of capital into and out of the country. under a floating exchange rate regime, exchange controls are not required because the market can adjust itself to meet the supply and demand of foreign currency and the exchange rate acts as an adjustor to adverse impacts from domestic or external shocks. prior attempts and intentions to liberalise exchange controls did not eventuate. in 1994, after the kina was floated, the controls were retained to allow the severely depleted reserves to be rebuilt to comfortable levels. again in 1997 and 1998, the timing was inappropriate with adverse economic shocks resulting from the el nino drought, sandline crisis and low confidence levels. one of the deciding factors not to pursue liberalisation was that, the central bank did not have the independence to rein in a monetary expansion, as a result of any expansionary fiscal policy, and to stop the pressure on the kina emanating from it. in 2000, whilst the enactment of the central banking act gave the central bank greater independence, the controls were kept to give the bank time to develop appropriate monetary instruments and prudential standards to achieve the objective of price stability. the stable macroeconomic environment that emerged in 2003 and improved outlook for the country has enabled the bank to revisit the liberalisation of the exchange controls. if ever there was a time to liberalise, this is it. the next question many of you may have is : what form would this liberalisation process take? as explained in my address to the annual mining conference in december 2004, the liberalisation involves imposing exemptions on the exchange control regulations, without actually doing away with the legislation on foreign exchange and gold regulation itself. we are in a sense shelving the legislation with the possibility of re - introducing it as and when the need arises, the most probable being in the event of a severe balance of payments crisis. another question on the minds of many present here is : when will