prices stay where they are now ( and i hope they do ), inflation should track back down to a moderate level before year end. what we should firmly avoid though is the vicious cycle of inflation to wages and in turn more inflation. if this happens, prices will permanently rise without any real improvements to the economy – purchasing power will decline, asset prices will erode, investment will suffer and growth will be even more difficult to achieve. how does one formulate monetary policy at a time like this when the economy is struggling to get up after a sizeable decline, inflation is rising and foreign reserves is still under pressure? if you were in our shoes, what would you do? wherever you turn, there will be conflict of objectives. you can therefore understand our dilemma. but the reserve bank ’ s mandate is clear and that is inflation and foreign reserves come first and growth later. if we cannot safeguard the first two, growth will virtually be impossible. we are now reviewing our entire monetary policy package which will take into account this difficult balancing act. remittances let me talk about remittances for a minute. remittances have generated a lot of interest in fiji recently. they had shot up since 2001 to a peak of $ 320 million in 2006 to become the second biggest foreign exchange earner next to tourism. but last year they declined by about 20 percent. we have identified four possible reasons for this big drop. first, the number of our security personnel in the middle east has tumbled significantly. second, families that were receiving remittances may have also migrated. thirdly, due to high transaction costs, many are resorting to sending money through the mail and friends and these are not captured in the official statistics. lastly, the exchange rate may also be a contributing factor as the us dollar has weakened against the fiji dollar. all these reasons however may still not fully account for the $ 64 million drop in remittances last year. there may be other technical reasons which we are examining. the reserve bank would really like to see lower remittances charges. these charges to do not appear to reflect the actual cost of remitting funds. the sender pays a lot of these charges which ultimately result in the receiver getting less fiji dollars. and then at some outlets here in fiji, the receiver gets slammed by another receiving charge. in some cases, the charges amount to 50 percent of the amount sent. comparison of the charges internationally shows that it cost

sada reddy : e - money fiji project statement by mr sada reddy, governor of the reserve bank of fiji, at the launch of the e - money fiji project, suva, 9 june 2010. * * * distinguished guests, ladies and gentlemen, let me thank you for accepting our invitation to be part of the launch of the e - money project for fiji. introduction some of you may be wondering what e - money is about. well, for our purpose today, it is money which can be transferred electronically from one person to another, one company to another, or from a person to a company or from government to a person or company. a popular e - money device or instrument, now used in developing countries, is the mobile phone, commonly known as “ mobile money ”. ladies and gentlemen, one of the rbf ’ s missions is to develop an internationally reputable financial system. the extension of financial services to fiji ’ s population is a critical element of this mission. for this reason, we have been working towards the introduction of mobile money services in fiji since 2009. a national financial inclusion taskforce, comprising representatives of the public and private sector, was formed early this year to drive initiatives such as this e - money project. financial exclusion has been a problem for fiji. some recent studies indicate that access to financial services in fiji is approximately 35 – 40 percent. in other words, most of the poor and rural and maritime dwellers do not have adequate financial services. benefits of mobile money as proven in other parts of the world, mobile money is seen as the new way of providing financial services using mobile phone technology and network. it is a form of branchless banking. this means that you do not necessarily have to build a bank in the remote areas for banking transactions. basic banking transactions can also now be done through the mobile phone. there are other benefits. for example, a farmer in the interior of vitilevu, where there is mobile coverage, can sell his produce from the middle of his dalo plantation without having to travel to suva. the buyer collects the produce from the farmer after transferring funds into his mobile account, which the farmer can cash out at an established agent of the mobile phone company in their region. the cash in / cash out agents could include the village store, the post office, the supermarkets, the service station and other retail outlets. this will make life easier for our farmers, fisherman, handicraft makers, small and medium enterprises