Kiribati’s Banking Industry Falls Short of International Standards
Despite being one of the least developed nations in the Pacific, Kiribati’s financial system remains heavily reliant on Australia’s economic powerhouse.
A Joint Venture with Limited Services
The country’s sole commercial bank, the Bank of Kiribati, is a joint venture between the Government of Kiribati and the Australia and New Zealand Banking Group Limited (ANZ), with ANZ holding a 75% stake since its acquisition in 2001. The bank provides both central and retail banking services, but operates with only four branches, leaving much of the country’s financial needs unmet.
A Limited Alternative
The Development Bank of Kiribati, which focuses on lending to small businesses, is a paltry alternative. Meanwhile, a loose network of “village banks” has emerged as an informal banking sector, providing microfinance services to those in need.
The Australian Dollar Dominates
In a shocking revelation, the country’s currency is actually the Australian dollar, highlighting Kiribati’s reliance on its larger neighbor. The nation’s foreign exchange reserves and domestic currency demand are also tracked by ANZ, further cementing its influence over Kiribati’s financial landscape.
A Missed Opportunity for Improvement
The Kiribati Provident Fund, responsible for funding the government pension scheme, invests in offshore bonds and stocks, but fails to provide a comprehensive banking solution for the country’s residents. As such, it is clear that Kiribati’s banking industry falls far short of international standards.
What Can Be Done?
- Improve financial inclusion by increasing access to banking services
- Develop a more diversified economy to reduce reliance on Australia
- Strengthen local institutions and increase regulatory oversight
- Invest in financial literacy programs to empower citizens
Kiribati’s banking industry is in dire need of improvement. By addressing these issues, the country can work towards achieving financial stability and independence.