regard and devise attractive instruments. for any secondary market to operate efficiently, whether in bonds or other securities requires market makers. this has been a long time in coming but i believe that we are close to making this a reality in barbados. there also has to be confidence in financial institutions and financial policies. poorly run companies with weak balances sheets and cash flow profile will not attract investors. moreover, they will cause confidence in well - managed firms to fall. where poor decisions lead to financial losses and collapses in one subsector, because of the high level of financial integration, the consequences can be widespread. the local, regional environments today are significantly different from what existed when we held our last capital markets conference. on the domestic scene the trend towards consolidation in the financial sector has continued. the local stock market index which rose by 26. 4 % in 2004 fell by 6. 8 % in 2006. the performance of the mutual fund component of the market which had been registering annual growth up to 2004 seems to be levelling off and performed below par in 2006. at the regional level many of the strongest well - established and most reputable regional companies have remained robust but some have experienced declines in their share prices during the last two years or so. however, the markets have not shown significant instability and are still relatively vibrant. the international economy however, has been beset by a serious liquidity crisis, instability in stock prices and a weakening in the us economy. it is against this backdrop that we thought it was timely to discuss some of the major issues, which are confronting the financial services industry abroad, and their impact on developments in the caribbean. the world is becoming more global and it is increasingly difficult to completely insulate ourselves from international developments. indeed this seminar comes at an opportune time both from an international perspective and from a national perspective. in the international markets the impact of the subprime problem has led to central bank intervention on an unprecedented scale. the securitization of mortgages and credit generally has served to merge the credit and securities markets and the capital markets to an extent where collateralized obligations are losing value sharply because of difficulties in the credit markets and the burden of stability has fallen on central banks. these movements have had their impact on both the equity and bond markets, so that central bank intervention in us europe and the uk have been related to maintaining stability in the capital markets as much as in the credit markets in a way which was not previously anticipated. the weakness

south east asian capital markets were highly liberalized – in fact that is why money was able to move out so quickly in 1997. yet everything points to the fact that financial liberalization assists in capital market development, particularly if they have global objectives. the second presentation after lunch deals with open market operations, drawing on the experiences of another regional central bank and should provide some useful lessons for us. we have observed the provision of liquidity by central banks in the major capitals recently as the credit crunch unfolded there. in the caribbean, the pressure is often in the other direction – to mop up liquidity. the cost can be tremendous. that discussion should be quite instructive. the panelists in the final session will focus on issues and challenges emanating from the regional capital markets. this should be an exciting session bringing together as it does a regulator, banker and an academic. somewhere in the course of our discourse we may hear some views on the attempted amalgamation here in barbados and the attempts to bid up the shares to levels way beyond expectations and as it turns out, beyond what the market can bear. it is instructive to determine whether the small size of our markets and the imperfections in the market lead to these types of developments which make our markets susceptible. ladies and gentlemen, you have to believe me when i tell you that this session was conceptualized before the current happenings which are now affecting three well - known conglomerates in barbados and trinidad and tobago and before the subprime problem erupted in the us, but not before barbados had committed to financial liberalization with respect to caricom with a hope of accelerating the development of our capital markets, so the timing has turned out to be a bonus in terms of interest in capital markets. we look forward to the presentations and we particularly thank those who have gone to much effort to be here. i thank you.