descriptions for its staff, and to hire the human resources to staff the unit. Delaying these decisions exposes the BPNG, as well as the NPS, to situations where oversight action might be necessary and yet the BPNG would not be able to deliver the required response. More generally, as a national payment system develops in its many dimensions, it requires central bank preparedness to govern its development. Currently, while the NPS in PNG is evolving rapidly, the BPNG is not yet adequately prepared to fulfill its governing, directing and oversight responsibilities. (See PNG: Payment System Assessment Update, by C Calozza and B Bossone, 2015 for relevant recommendations.) Coordination, cooperation and information sharing between agencies There appears to be a serious lack of coordination, lack of cooperation and lack of information sharing between the various agencies. There is no formal coordination arrangements between the DOT and the BPNG for handling systemic risk issues. Nor are there any formal arrangements between the BPNG and the PNGIC. There is considerable scope for enhancing cooperation, coordination and information sharing between the BPNG and the PNGIC. Coordination, cooperation and information exchange between regulators is essential and demanded by international standards. Moreover, both the BPNG and PNGIC have financial stability responsibilities, which also require active cooperation, coordination and information exchange. The financial sector under the jurisdiction of the PNGIC may not at present pose major systemic risks, but it remains important to monitor it. The mission found that the BPNG and PNGIC do not cooperate adequately or properly coordinate their regulatory functions. Recommendation: Memoranda of understanding (MOUs) must be entered into between the various domestic agencies which encapsulate their coordination, cooperation and information sharing arrangements bilaterally and multilaterally. These MOUs must also deal with contingency planning, crisis simulation exercise and crisis management. The same applies to relevant and material foreign counterparts. In the event that the responsibility for registration of S&Ls in future were to be vested in the Investment Promotion Authority (IPA), it would be necessary for there to be proper coordination, cooperation and information sharing between the BPNG and the IPA. Appropriate structures and procedures must be put in place to ensure effective coordination, cooperation and information sharing takes place.
Basis and criteria used as reference for development of change proposals In the view of the mission, the fundamental issues relating to the PNG financial sector regulatory architecture include: How best to position the PNG financial sector regulatory architecture for the future. The key considerations include the following: PNG’s development needs (-financial literacy; financial inclusion.) The proposal contains recommendations relating to consumer protection. Financial innovation: The proposal contains recommendations relating to capacity creation and development. One of the scale benefits should be a greater capacity to accommodate, cater for and deal with innovation. Technology: One of the scale benefits should be a greater capacity to gain access to, accommodate, cater for and deal with technology. International standards and sound practices: This is a key theme of the proposal. to overcome the shortcomings in coordination, cooperation and information exchange. to address the PNG capacity issue in relation to public policy development and its encapsulation in legislative, regulatory and supervisory frameworks, and day-to-day operations and supervision. to ensure that the PNG regulatory authorities are soundly financed, governed and resourced. Considerations regarding integration of regulatory authorities The following considerations arising from the implications of the change proposal were also taken into account: Role of the BPNG The question arises whether requiring the BPNG to discharge the mandate of an integrated prudential regulatory authority would be asking too much of the BPNG. An integrated financial sector architecture may impose a high demand on the BPNG. The AML/CFT, exchange control mandates already impose a heavy burden on the BPNG. In addition, the BPNG voluntarily has become the driver of the national financial inclusion strategy, is responsible for managing the national foreign exchange reserves, and will now be planning an important role in the PNG sovereign wealth fund. On the other hand, the needs