Bank of Papua New Guinea (BPNG)

Overview

The Bank of Papua New Guinea (BPNG) is the central bank of Papua New Guinea, established on 1 November 1973 under the Central Banking Act 1973, prior to Papua New Guinea's independence on 16 September 1975. The BPNG commenced operations as Papua New Guinea's central bank, replacing the Reserve Bank of Australia's colonial banking functions. The institution's headquarters are located in Port Moresby.

Current Governor (2025-2027): Ms Elizabeth Genia, appointed December 2023

Ms Genia became the first female Governor of the Bank of Papua New Guinea, appointed by the Prime Minister and PNG National Executive Council for a four-year term commencing January 2024. She leads the institution through a critical period of financial system modernization and international regulatory engagement.

Basic Identity

Classification

Inclusion Justification

What This Entity Oversees

The BPNG exercises comprehensive banking supervision over the financial system, with responsibility for regulating and supervising:

• Commercial banks (Authorized Deposit-taking Institutions - ADIs)

• Non-bank deposit-taking financial institutions

• Superannuation funds (Authorized Superannuation Funds - ASFs)

• Life insurance companies (Life Insurance Companies - LICs)

Supervisory Organization

The Banking Supervision Department oversees all ADIs (commercial and developmental banks, finance companies), while separate departments supervise ASFs (superannuation funds) and LICs (life insurance companies). This institutional arrangement enables specialized expertise and focused oversight of distinct financial system segments.

Prudential Supervision Framework

The BPNG's supervisory approach recognizes the primary responsibility of each bank's board and management to establish policies and procedures for prudent risk management. The BPNG:

• Establishes prudential standards and requirements

• Conducts regular on-site examinations and off-site monitoring

• Issues supervisory guidance and expectations

• Assesses compliance with prudential standards

• Takes corrective action for non-compliance

• Intervenes progressively for material breaches

Prudential requirements address capital adequacy, asset quality, liquidity, credit concentration, market risks, and operational risk management. The BPNG regularly updates prudential standards to align with international best practices and financial system developments.

Superannuation and Pension Supervision

The BPNG exercises regulatory oversight over Papua New Guinea's superannuation system:

• Licensing and supervision of superannuation funds (ASFs)

• Prudential regulation of pension fund operations

• Capital and reserve requirements for superannuation entities

• Regular compliance monitoring and examination

• Consumer protection standards for fund members

• Governance and operational standards for superannuation providers

This supervisory function ensures the safety and soundness of retirement savings for Papua New Guinea workers and promotes confidence in the superannuation system.

The Bank of Papua New Guinea maintains comprehensive AML/CFT oversight through its dedicated Financial Analysis and Supervision Unit (FASU).

FASU Structure and Independence

FASU was established under the Anti-Money Laundering and Counter Terrorist Financing Act 2015 to detect and deter financial crimes and support law enforcement efforts. The unit operates with operational independence from the Bank of Papua New Guinea, with the FASU Director reporting to the Governor while maintaining autonomous decision-making authority.

FASU Functions and Powers

The Director of FASU holds all functions and powers vested under the Anti-Money Laundering and Counter Terrorist Financing Act 2015, including:

• Receipt and analysis of suspicious matter reports from financial institutions

• Investigation of suspected money laundering and terrorist financing

• Financial intelligence gathering and analysis

• Coordination with law enforcement and intelligence agencies

• Asset freeze and seizure authority for designated persons/entities

• Guidance and support for financial institution compliance

• Development of AML/CFT supervision standards

Compliance Framework

Financial institutions must submit suspicious matter reports within five working days of suspicion arising. Failure to report is an offense punishable by fines, imprisonment, or both. BPNG provides regulatory guidance on:

• Know Your Customer (KYC) and Customer Due Diligence (CDD)

• Enhanced Due Diligence (EDD) for high-risk customers

• Beneficial ownership identification

• Sanctions screening and targeted financial sanctions compliance

• Record-keeping and documentation requirements

International Cooperation

The BPNG cooperates with international partners on AML/CFT matters through FATF (Financial Action Task Force) mutual evaluation processes and regional initiatives. Papua New Guinea faced greylisting discussions related to AML/CFT technical compliance gaps, prompting enhanced FASU capacity building and regulatory improvements.

While the primary focus of the BPNG's non-banking supervision is superannuation funds and life insurance companies, the institution maintains oversight of:

• Life insurance company operations and prudential standards

• Reserve and capital requirements for insurers

• Consumer protection in insurance markets

• Coordination with other insurance sector regulators where applicable

Regulatory Powers

The BPNG maintains comprehensive enforcement powers to ensure compliance with banking laws, regulations, and supervisory directives:

• Issuance of supervisory letters and corrective action directives

• Assessment of penalties and fines for violations

• License suspension or revocation for material breaches

• Asset seizure and receivership administration

• Coordination with law enforcement and FASU for financial crimes

• Liquidation of failed institutions

Enforcement is graduated in response to the severity of violations, ranging from warnings and compliance agreements to license revocation and criminal referrals.

Regulatory Role and Function

Legal Foundation

The Bank of Papua New Guinea operates under the Central Banking Act 2000 (Chapter 138), which modernized and replaced the original Central Banking Act 1973. The current legislative framework provides:

• Authority to formulate and implement monetary policy

• Currency management and issuance authority

• Banking supervision and regulation powers

• Financial system stability oversight responsibilities

• Payment system regulation and oversight

• Foreign exchange management and reserve custody

• Development and enforcement of prudential regulations

The Central Banking Act 2000 reinforced the BPNG's operational independence and enhanced its capacity to regulate and supervise the financial system effectively. The Act defines the Bank's core mandate as directing monetary and banking policy to the greatest advantage of the people of Papua New Guinea, promoting monetary stability, and supporting a sound and efficient financial structure.

Licensing and Authorization Relevance

The Bank of Papua New Guinea (BPNG) is a key licensing authority in Papua New Guinea's financial system:

The licensing process typically involves assessment of capital adequacy, fitness and propriety of management, business plan viability, AML/CFT compliance frameworks, and IT systems readiness.

Payments and Money Movement Relevance

The Bank of Papua New Guinea implements a formal monetary policy framework with the primary objective of maintaining price stability and supporting sustainable economic development. The BPNG's monetary policy functions include:

• Official Cash Rate setting and management

• Open market operations

• Reserve requirement administration

• Liquidity management and wholesale funding operations

• Monetary policy communication and guidance

• Inflation targeting framework

The BPNG publishes regular Monetary Policy Statements communicating its assessment of economic conditions, inflation outlook, and policy stance. The institution monitors inflation trends, employment conditions, and output growth as part of its comprehensive macroeconomic assessment framework.

The Bank of Papua New Guinea maintains statutory responsibility under the Central Banking Act 2000 to ensure the National Payments System functions efficiently and reliably. Key responsibilities include:

• Regulation and oversight of the national payments system

• Oversight of specific payment systems and payment service providers

• Regulation of payment instruments and services

• Operational management of critical payment infrastructure

• Cheque processing and clearing operations

• Electronic payment system operations, including mobile payments

• Standards setting for payment system safety and efficiency

The BPNG operates as custodian of the National Payments System and has emphasized modernization initiatives to improve payment efficiency, expand digital capabilities, and enhance system resilience. The institution is supported by the National Payments System Act 2013, which empowers BPNG to regulate payments infrastructure and any specific system partially operating in Papua New Guinea.

The Bank of Papua New Guinea manages Papua New Guinea's foreign exchange operations and external sector stability:

• Official foreign exchange reserve management and custody

• Foreign exchange market regulation and oversight

• Exchange rate policy and management

• Balance of payments monitoring and analysis

• External sector risk assessment

• Capital account transaction oversight

• Currency stability maintenance

The BPNG works to maintain sustainable external positions and adequate foreign exchange reserves to support macroeconomic stability and financial system resilience.

Payment Systems Governed or Overseen

The BPNG operates and/or oversees the national payment and settlement infrastructure of Papua New Guinea. Specific systems include:

Relationship to Other Regulators

The Bank of Papua New Guinea maintains active international engagement:

International Monetary Fund (IMF)

• Article IV consultation and surveillance participation

• Technical assistance cooperation on monetary policy, banking supervision, and payment systems

• Financial sector assessment programs

World Bank

• Participation in development initiatives and financial sector projects

• Engagement on financial system resilience and stability

Asian Development Bank (ADB)

• Technical assistance programs for banking supervision capacity building

• Support for financial system modernization initiatives

Regional Organizations

• Leadership role in Pacific Islands Central Banks cooperation

• Participation in regional payment system initiatives

• Coordination on harmonization of supervisory standards

• Engagement with the Alliance for Financial Inclusion (AFI)

Co-hosting FATF Activities

• Support for anti-money laundering and counter-terrorist financing mutual evaluations and capacity building in the Pacific region

The BPNG co-hosted the 2026 AFI Global Policy Forum, demonstrating its leadership role in regional financial inclusion and regulatory innovation.

Geography and Jurisdiction Notes

Important Departments and Divisions

Key Public Resources

Bank of Papua New Guinea

• Address: Waigani Drive, Port Moresby, Papua New Guinea

• Website: https://www.bankpng.gov.pg/

• Telephone: +675 3287 000

Governor: Ms Elizabeth Genia

Notes on Naming and Language