be another meeting where we just come, talk and go away. i will be very interested in the practical action plan that the workshop should produce at the end of the 2 - day meet. i look forward to your usual contribution and commitment in this respect. over the years, we have seen various action plans being generated at meetings held for the development of microfinance and smes. most of these plans have remained plans and not actioned. a good starting point therefore would be to do a stocktake to determine the extent of financial inclusion in the country and then determine areas that need further improvement and who should be responsible for doing this. this should be followed by developing strategies for lifting financial inclusion in fiji to the next level. what role can each of the institutions represented here play to realise the extension of financial services to the remote areas? it is my hope that this workshop will not only crystallise these roles for us, but that we will action them so that we achieve measurable results. what the reserve bank is doing for a number of years the reserve bank of fiji has been advocating the development of microfinance in fiji and also greater participation of the financial sector in areas like financial literacy and access to banking for rural / remote areas of fiji, similar to many other developing economies around the world. this year, as many of you may be well aware, the rbf has taken the challenge of promoting financial inclusion in fiji and ensuring a financial system geared towards supporting this critical area. our intention is to see the poor or those considered unbankable being provided access to savings and credit facilities that will ultimately help in reducing poverty. accordingly, the aim of the workshop is to come up with clear and actionable strategies for promoting financial inclusion. the microfinance sector plays a very important role in economic development. this has been proven in both the developing and developed countries of the world. we have seen it necessary to pick up the momentum in this particular area of economic development. for this reason, the rbf has become more involved rather than just playing a promotional role. to express our commitment, we established a new department at the bank called the financial systems development and compliance group. amongst other responsibilities, the group will drive the development of microfinance and other financial inclusion initiatives to reach the poor and vulnerable in society. this workshop is the materialisation of planning by this new department which has only been in existence for over 7 months. the outcomes of this meeting will also be monitored by this

euro area, but also across the world. following the bankruptcy of lehman brothers in september 2008, the deterioration of financial markets accelerated. investors ’ loss of risk appetite, as well as the reassessment of credit and liquidity risk, has been reflected in significant rises in credit and cds spreads. this is a phenomenon that has particularly affected firms with lower ratings ( both in the financial sector and in other sectors ). during this turbulent period, we have faced substantial impairments to the transmission of policy rates to the money markets. this is most evident from the strong increase in the spread between the euribor rates ( indicative rates for unsecured lending among banks ) and the corresponding euro overnight index swap rates ( eonia swap rates ), compared to the levels prevailing before the turmoil. this development reflects the reluctance of banks to lend to each other and is closely related to a general lack of transparency – as i mentioned earlier – about the magnitude of exposures that individual banks carry on their books. currently, around 2100 credit institutions are eligible for eurosystem ’ s open market operations, almost 2300 credit institutions can access the eurosystem ’ s marginal lending facility. the transmission of monetary policy decisions to very short - term money markets is just the first step along the transmission mechanism. such decisions are subsequently passed through to bank lending rates, which represent one of the key channels through which monetary policy affects the economy. we know that, reflecting contractual arrangements and banking practices, in many countries a variety of bank lending interest rates tend to adjust in line with the three - month euribor rather than the policy rate. this implies that the borrowing costs of households and firms increased considerably before october 2008, also relative to the policy rate. more recently, most bank interest rates have started to decrease substantially reflecting the lowering of policy and money market rates started in october 2008. as a result of the continuing decrease of euribor rates, we can expect further reductions in bank lending rates. we have also observed some signs of easing conditions for risk premia in financial markets at the end of 2008. looking in particular at the monetary policy reaction to the crisis, the size of the cumulated interest rate reductions, especially since the coordinated interest - rate cut on 8 october 2008 with five other major central banks ( bank of canada, bank of england, the federal reserve, sveriges riksbank and swiss national bank ) has been exceptional and has left the policy rates of most central banks at historically low levels