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Wednesday, March 07, 2007

Reserve Bank of Fiji : Sleeping on its watch?

More and more is coming out now with regard to alleged scams and mismanagement at the Fiji National Provident Fund (FNPF), members' funds invested at sub-optimal projects by the FNPF, high banks' profits resulting out of Reserve Bank of Fiji's monetary policy settings, complaints about high interest rates and fees charged by banks, but who shall we say is responsible for all this? Yes, the Reserve Bank of Fiji!

The Reserve Bank of Fiji is tasked among other things to "promote a sound financial structure". In carrying out that role, it has prudential oversight of the banking system, the insurance industry, foreign exchange dealers and money changers and the superannuation industry. Whilst conducting its function, the Reserve Bank of Fiji receives and analyses returns submitted periodically by these institutions and using an "early warning signal" system, conducts detailed on-site examinations of institutions under its supervision.

With all that is now being reported in the press, everyone is quick to point at the perpetrators of these alleged abuses. What everyone should really be doing is to point to the supervisor - the Reserve Bank of Fiji and ask the Bank what it has been doing, was it aware of what has been happening and what actions did it take to mitigate any damage to the "interests of depositors, insureds and pension fund members" which is its function.

In my opinion, the Reserve Bank of Fiji has failed to live up to its responsibilities. Its monetary policy has failed (now having Government to tell it how to do that by injecting much needed funds into the financial system) and its prudential supervisory policy and activities have also failed. What next?

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2 Comments:

At 7:12 AM, Blogger laminar_flow said...

This performance by RBF has been horrendous. Perhaps they should be getting a clean up too with Fiji Trade and Investment Board bringing up the rear.

 
At 8:19 AM, Blogger Gilbert Veisamasama, Jr said...

I would say that part of the responsibility for the mess lies squarely at Reserve Bank of Fiji's door as financial system supervisor. They should be taken to task as well. There is no need for another investigation over the Fiji National Provident Fund if the Reserve Bank of Fiji was doing its work well.

 

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