While surveys do not suggest that access to finance is the private sector’s main concern, this is probably due to the fact that firms have been able to finance projects through their own funds. Over the last decade, companies shifted to intragroup loans and intercompany lending instead of bank loans as a main source of financing. One, of course, needs to distinguish between intragroup loans (parent to subsidiaries or subsidiaries to other subsidiaries) which we think make up the bulk of “intercompany” lending and other intercompany lending undertaken through factoring, trade credit and loan funds. Also bear in mind that the Financial Institutions Act related companies (within a group) do not need a licence to lend to each other. To give loans outside the group (intercompany) one does need a licence. While it is beneficial to see a diversification of firms’ financing sources, this change raises some issues. Let us start with something we discussed last year. We need to be careful that in the current low interest environment, investors’ search for yield does not stimulate excessive risk-taking. Therefore, we need to complement the rise in corporate bond issuance with a significant effort in improving investors’ education and compel corporates  Page 7 of 10  borrowing from the domestic capital market to provide more information to investors about their creditworthiness.
Page 9 of 10  I believe that the financial services community can and must contribute to change our nation’s mentality. At the interface between our nation’s savings and investment it is best placed to leverage more effectively our current economic success. Thank you. Page 10 of 10