who owed how much to whom resulted in overnight interbank lending rates increasing significantly and central banks had to provide additional liquidity to facilitate the orderly functioning of financial markets. current estimates regarding the scale of losses suffered by mortgage owners in the us range between us $ 400 billion and us $ 500 billion, although in a recent article krugman ( 2008 ) states that “ i think there ’ ll be $ 1 trillion of losses on mortgage - backed securities... ” the turbulence came to the fore in many ways. probably the most pervasive immediate consequence was the repricing of risk. global markets generally experienced considerable volatility and illiquidity and borrowers were confronting tighter terms and conditions, spawning fears of a “ credit crunch ” which could harm economic growth. credit spreads which had declined to extraordinarily low levels picked up considerably, as illustrated in the accompanying graph. policy reactions to the turbulence one should point out immediately that some part of the turmoil – an upward adjustment to the risk premia imbedded in the prices of a range of financial assets – should be welcomed as a normalisation of affairs, such premia previously having been unsustainably low. however, authorities had to be mindful of the need to prevent total overshooting behaviour, and had to ensure the continued smooth functioning of the financial system as a whole. at the same time the hard - won gains in the fight against inflation had to be consolidated and protected, keeping inflation low and stable. fortunately, the deterioration in the global inflation environment due to the rising prices of energy and food was partly offset by the continued impact of globalisation, the pursuit of sound macroeconomic policies and the effect of a long period of low inflation on inflation expectations. when the turmoil struck the financial markets in the united states quite visibly in august 2007, the federal reserve responded decisively by loosening monetary policy and adding some liquidity to the money market. this provided some relief to cash - strapped borrowers. over the subsequent six months the authorities in the us loosened monetary policy further, with the objective among other things to restore the affordability of housing and halt the rising delinquency rate. the fed also became engaged in match - making and rescuing troubled institutions. a number of prominent financial institutions had to write off huge amounts on account of bad loans, dragging down their share prices and raising concerns regarding their status as creditworthy counterparties. in the past few weeks the federal reserve put its balance sheet in

upgrade of our payment systems has a critical role to play in fostering private sector led commerce. while demand for payments has grown with the advancement of innovative technological solutions, the payment regulatory and infrastructure 3 / 4 bis central bankers'speeches landscape in fiji has comparatively lagged. the proposed reform entails enacting the necessary legislation and regulations and backing this up with the appropriate ict infrastructure and support to enable the following : broadening of the range of payment instruments and services ; improvement of cost efficiencies ; enhancement of interoperability and resiliency ; greater management of risks and provisions of effective oversight ; the promotion of overall efficiency and stability ; and strengthening consumer protection. the reform at large, also aligns to government ’ s digital payment roadmap 2019 and 5 - year and 20 - year national development plans. these plans and the reform will also address developments for the increasing financial inclusion of our vulnerable population by ensuring that affordable and effective payment products and services are available to the underserved sectors of the economy including msmes, the poor and low - income families ; as well as the increasing globalisation of payment systems, with resulting drive for regulatory harmonisation, fraud prevention and customer funds safeguarding. consultations on the bill honourable members, prior to the tabling of the bill in cabinet last month, consultations for the bill were held with the ministry of economy, the ministry of communications, the association of banks in fiji, the fiji national provident fund, the finance companies association, the insurance council of fiji and the office of the solicitor - general. conclusion honourable chair and members of the standing committee, i wish to conclude with the following points : this is a major reform that will revolutionise a critical part of the everyday commerce and industry. a modern, efficient and reliable payments infrastructure is essential to encourage innovation and commerce, the growth and development of financial markets and improve the transmission of monetary policy. the capability of dematerialisation and clearing and settling a wide range of transactions according to international standards will also enhance the business environment which will in turn attract foreign investment. the overall reform is aimed at making a positive holistic impact on fiji ’ s payment ecosystem. as the national payment system develops, the experience for payment system participants is expected to improve. businesses are expected to see efficiencies in operations, including declining cash - handling costs and lower administration costs due to increased interoperability between payment system providers, leading to a decline in perceptions of payments as a barrier to