Introduction
I would like to acknowledge the Jagera people and the Turrbal people as the traditional Custodians of the land on which we gather today.
I pay my respects to their Elders past and present, and I acknowledge any First Nations Australians in attendance today.
To his Excellency, the Honourable David Adeang, President of Nauru. The Honourable Mark Brown, Prime Minister of the Cook Islands. Secretary General Baron Waqa of the Pacific Islands Forum Secretariat. Excellencies, Honourable Ministers, Central Bank Governors, and distinguished guests.
On behalf of the Australian Government, it is my honour to open the Pacific Banking Forum and welcome you all to Brisbane today.
I also want to thank the United States for co‑hosting this forum.
Prime Minister Albanese and President Biden have committed our countries to working with our Pacific Island partners to maintain access to enduring banking services.
That work will be a key focus of the next 2 days.
And I want to acknowledge the contribution of the Pacific Islands Forum Secretariat and the World Bank to this project.
The discussions held in Sydney earlier this year began the implementation of the roadmap for Correspondent Banking Relationships.
You have helped lay the groundwork for this forum.
And today we take the next step forward.
As a member of the Pacific Islands Forum, Australia supports the Secretariat in implementing this Roadmap.
It is why the governments of Australia and the US launched the Pacific Banking Forum. So that we can bring together the key stakeholders across the public and private sectors.
Today, we have representatives from governments and regulators.
Banks and payment service providers.
And our multilateral institutional partners from across the Pacific region.
This is a significant gathering.
It is the first time we have had representatives from each stakeholder group in the same room.
It’s a testament to the size of the challenge –
The importance of getting it right –
And the willingness to work towards solutions.
I thank you all for being here to contribute to this important discussion.
Australia’s role
The Pacific is our home.
Our relationships have been forged through a shared history and common values –
Through inseparable links between cultures, sport and business –
And, of course, through our people. The threads that bind us are enduring.
ANZ’s CEO, Shayne Elliott, will present to the forum later today.
ANZ’s relationship with the Pacific began almost 150 years ago.
In 1880, the Union Bank of Australia – today’s ANZ – established its first branch in Fiji.
These are long‑lasting friendships.
So it is Australia’s desire and, we feel, our responsibility to strengthen the Pacific family.
And to do this, the Albanese government has focussed on listening and learning.
So that we are responding to the Pacific’s priorities.
Which enables us to invest in the Pacific’s key economic drivers.
Stronger public financial management.
Infrastructure, as the region’s largest investor.
Connectivity between people and industries.
And training opportunities to create jobs across our region.
As a government, we were proud to expand and improve the Pacific Labour Mobility scheme last year.
This will help address critical workforce shortages here in Australia. And deliver a skills dividend and higher incomes to the Pacific Islands.
Our new Pacific Engagement Visa will also create more opportunities for the people of the Pacific Islands to live and work here in Australia.
Listening. Learning. And acting in the region’s interests.
As Assistant Treasurer, I was honoured to join many of you at the Pacific Islands Forum Economic Ministers Meetings for the past 2 years.
I valued listening and learning about the different challenges and priorities. And establishing a mutual understanding of our joint regional interests.
So that Australia can help the Pacific realise its substantial economic potential.
Correspondent banking relationships
A key challenge to this goal is access to correspondent banking services.
Economic growth and resilience rely on a robust financial system.
Which requires sustainable banking services, and a connection to the global economy.
This is where correspondent banks fit in.
Correspondent banks are fundamental to accessing global finance.
It enables trade and investment.
It supports tourism and development.
And it facilitates sending and receiving remittances, which drive domestic economic activity.
Let’s be very clear, correspondent banks are important for all countries – Australia included.
But it is particularly important for small countries that rely on significant currency flows.
Strong banking and financial services are necessary for a sustainable and robust economy.
We want to imagine a strong and vibrant Pacific.
We want to see greater opportunities for vulnerable communities.
We want to strengthen resilience to the pressures of climate change.
These are all supported by – and in many ways rely on – a sound financial system.
However, in recent years, the correspondent banking system has faced a crisis.
Institutions have weighed up the profitability of their correspondent banking relationships and sought to reduce their footprint.
Regulation has increased – and has needed to – but it comes with a cost.
Reputational risks have also increased in line with an enhanced – and, again, necessary – focus on having robust checks in place to prevent illicit financial activities.
As such, many financial institutions have chosen to ‘de‑risk’.
This is the sanitised phrase that refers to financial institutions reducing and withdrawing key banking services because of these costs.
It’s a phenomenon that has a genuine impact on the people of affected economies.
But these impacts are not experienced uniformly across all regions.
And the Pacific has borne the brunt of the decline.
The Pacific has experienced the fastest decline in correspondent banks of anywhere in the world.
Between 2011 and 2022, the Pacific region lost around 80 per cent of its correspondent banking relationships in services denominated in US dollars.
The number of active correspondents fell by about 60 per cent.
This is a decline almost double the size and severity of the global trend.
The impact of de‑risking
As a result, local banks in the Pacific are losing their access to foreign currencies and international payment systems.
This is significant.
Local banks provide essential services that foreign‑owned institutions can’t or won’t provide.
This is particularly acute for customers who are remote, vulnerable and disadvantaged.
These essential services are now under threat.
De‑risking has significant implications for trade, investment flows, and remittance.
It also restricts the ability for governments to deliver services.
In the worst‑case scenarios, this can prevent the importation of products that facilitate essential services like electricity generation.
The challenge for the forum
So Australia recognises the reality of the problem.
We also understand the scale and complexity of the challenge.
Many Pacific countries contend with geographic remoteness and small populations.
These are structural realities that make for difficult operating environments.
Meanwhile, the Pacific is facing the real, immediate and growing costs of climate change.
This will increasingly affect the economies of the region.
And I’m not blind to the operating environment of the banks either.
I believe they want to be part of the solution, but they also face costs and challenges which needs to be considered.
So the task is significant.
But the need to act is greater.
I re‑affirm Australia’s ongoing commitment to work with our Pacific partners on solutions that are practical, meaningful, and sustainable.
But no one can solve this problem alone.
A successful and holistic approach will require collective action.
And it is why we have partnered with the US to work with our Pacific friends.
By working together – leveraging our respective advantages and areas of responsibility – we can address these challenges.
And we are not starting with a blank slate.
Work is underway and has been for some time.
Our Pacific friends are committed to addressing these issues and have been implementing national initiatives.
Australia strongly supports these initiatives.
And we support the work of regional groups – such as the Pacific Islands Regional Initiative and the Pacific Islands Forum Secretariat.
And the work of the multilateral institutions that are delivering foundational technical assistance across the Pacific.
We will continue to support these initiatives.
So that, together, we can support the region to develop strong banking foundations.
Because this is our home.
And our joint prosperity makes us richer.
Conclusion
I would like to close with a final message to everyone gathered here today.
I ask you to engage openly, frankly and in the spirit of collaboration.
As we all know, there is no single or easy solution.
And everyone has a part to play in addressing this issue.
I am confident that today – and in the days to come – we will lay the foundations for a strong and sustainable financial ecosystem in the Pacific.
By working together, we can chart a path forward.
Towards a resilient and prosperous Pacific.