Bank Book

ANEW book detailing the financial development of the South Pacific is now available. Financial Insti tutions and Markets in the South Pacific by Michael Skully, a senior lecturer in the Department of Finance at the University of New South Wales’ School of Accoun tancy, covers the financial sectors of New Caledonia, Solomon Islands, Tonga, Van uatu and Western Samoa.

“It is the first detailed look at these countries’ financial sectors,” claims the author. “Even in the ’7os, commercial banks dominated local finance and in some cases were virtually the only insti tution. Today, however, most of these countries have a range of financial insti tutions as well as the beginnings of a money and foreign exchange market.

“Vanuatu, in particular, is now an es tablished offshore financial centre with a ►

of international banks, trust com panies, accounting firms and solicitors.”

Skully explains that, given the in creased competition for international de velopment aid and foreign investment among developing countries, the respec tive governments are expecting their fi nancial sectors both to expand local savings and better allocate domestic investment.

The author says that Australia is very important to the region as Sydney often serves as the regional headquarters for major South Pacific businesses. It is also a significant source of development aid funds and a major trading partner for these countries.

Historically, he points out, Australian banks were similarly important, with the Commonwealth Bank initiating the sav ings banking services in both the Solomon Islands and what is now Vanuatu. The Westpac Banking Corporation likewise influenced the development of commer cial banking in Tonga and Western Sa moa. The Reserve Bank of Australia, too, once helped administer Vanuatu’s foreign exchange controls, and both Vanuatu and the Solomon Islands even once used Aus tralian dollars as local currency, he says.

The book devotes a separate chapter to such developments in each of the five countries. Each chapter, in turn, follows the same format, starting with a concise his tory of the country and its financial sector.

The author then examines the develop ment of each type of financial institution, the local money and foreign exchange markets, considers how these operations could be improved, and finally speculates on what future developments might oc cur. Financial Institutions and Markets in the South Pacific (Macmillan, $A98.95) is a handy guide to the region and should prove a valuable reference for business people as well as researchers in develop ment and financial economics. □