As commodities become the flavour of the day, market participants should ensure that they understand the risks as they participate more actively in the markets. In their eagerness to  2  BIS Review 90/2008  ride the commodities wave, banks and other intermediaries should put in place appropriate risk management systems and processes, ensure they have adequate resources including qualified staff, and uphold proper market conduct. Investors too, should carefully evaluate complex structures as they seek attractive returns. Singapore as a commodities hub Singapore has historically played an important role to connect importers and exporters. Besides being strategically located, Singapore offers a high level of connectivity with its efficient infrastructure and business friendly environment. Today, Singapore is a key aviation and shipping hub, and an international financial centre. In the area of commodities, over 230 global trading companies have their offshore trading, marketing and procurement operations in Singapore. We enjoy the reputation as the top energy trading hub in Asia, and is increasingly a location of choice for other sectors including agri-commodities, metals and minerals. Singapore continues to be the hub for over the counter ("OTC") commodities derivatives trading in the region, capturing more than 10% of global OTC commodities. In May 2006, the SGX launched a central counterparty clearing facility or SGX AsiaClear, for OTC commodities trading to mitigate counterparty risks and create efficiencies for the market place. Today, SGX AsiaClear has seen growth in energy, freight and petrochemical derivatives and potentially agriculture commodities.

Indeed, developments in recent years have demonstrated that monetary policy and financial stability, in many ways, are more intimately connected than we may previously have imagined. One of the challenges I intend to address today deals with the difficulty of assessing the effects on potential output and growth of the financial crisis and the regulations following in its wake. Another challenge concerns the impact of these regulations on monetary policy’s transmission mechanism. Finally, I will also discuss the possibility of preventing a credit-driven property boom. One highly current and significant challenge is that of preventing the central government finance problems primarily facing Greece, but also a number of other countries, from leading to new problems on the financial markets. The solution to this must primarily be sought on the international political level. This is a matter both of implementing measures to maintain confidence and of solving the most acute problems. The comprehensive support package for countries with serious budget problems, recently presented by the EU countries and International Monetary Fund, should be considered one such measure. Of course, a more lasting solution will also require the problem to be tackled at its root – for the regulatory framework for central government finances to be reviewed so that similar situations can be avoided in the future. Discussions on how best to do this have also been initiated. Hopefully, this will be enough to restore calm and for the process of recovery and normalisation following the financial crisis to continue.