The Reserve Bank of Fiji is the central bank, (formerly the Central Monetary Authority), created in 1983 to replace the currency board; the Fiji Development Bank is the main development finance agency. Commercial banking facilities consist of the National Bank of Fiji (NBF) and branches of several foreign banks. As of 2000, there were six commercial banks in Fiji. The NBF enjoys the status of a commercial bank, but it does little business. The troubled NBF is undergoing a process of restructuring following revelations of a high level of nonperforming loans. The government had to spend upwards of $105 million to keep the bank operating. Other banks include two Australian banks, one Indian bank, one Pakistani bank, and the Bank of Hawaii. The government-owned Fiji Development Bank provides financing for development projects.
Growth in money supply has fluctuated widely in response to trends in foreign trade, affecting the level of reserves. The government tends to follow a cautious monetary policy, which has concentrated on maintaining price stability and on managing high levels of liquidity in the commercial banking system resulting from low levels of private investment. Total assets of financial institutions in 1997 reached $2.3 billion, an increase of only 0.7% from 1996. The government devalued the currency by 20% in January 1998 due to economic woes. The International Monetary Fund reports that in 2001, currency and demand deposits—an aggregate commonly known as M1—were equal to $272.7 million. In that same year, M2—an aggregate equal to M1 plus savings deposits, small time deposits, and money market mutual funds—was $644.4 million. The money market rate, the rate at which financial institutions lend to one another in the short term, was 0.79%. The discount rate, the interest rate at which the central bank lends to financial institutions in the short term, was 1.75%.
The Suva Stock Exchange operates in Suva, Fiji.
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