? let ’ s not forget that the risk of deflation was averted, and that risk was extremely dangerous. inflation has indeed been below the objective for some time, but behind this there are structural changes for which we don ’ t yet have a full explanation. is this damaging the institution ’ s credibility? no. we would have had a credibility problem if deflation had taken hold. the question is why wage increases are not passing through to price inflation. this is one of the legacies of the crisis a decade ago. what is christine lagarde ’ s biggest challenge? on the one hand, the severity of the economic slowdown. we expect growth to be slightly above 1 / 3 bis central bankers'speeches 1 %, but with downside risks. in the financial sector, the greatest challenges are banks ’ very low profitability, risks stemming from low rates and the assets managed by the funds industry, which have grown considerably. the ecb ’ s policies have had the undesired effect of redistributing income. they have had a certain negative effect on savers and have potentially pushed up asset prices, but they have also had a positive effect in the form of economic growth, job creation and wage increases. according to our calculations, the net effect has added 2 percentage points to growth. as a result of the ecb ’ s actions, the situation in europe is nothing like it was ten years ago. there has been criticism of the ecb becoming more political and less technical with christine lagarde and you at the helm – both of you are former ministers with no central banking experience. monetary policy must be just another element that has a place within economic policy. it ’ s good to have experience in other areas. central bankers have sometimes been working in an ivory tower. christine lagarde – not to mention myself – is well versed in the euro area ’ s mechanisms. the ecb ’ s decision - makers need to understand the context, make sound choices from among the alternatives and communicate appropriately. ms lagarde will do this extremely clearly. internal criticism, resignations, partisan leaks to the press … divisions within the ecb seem to have flared up in recent weeks. strangely, there ’ s sometimes more politics going on inside a central bank than in governments. seriously though, the 25 members of the governing council should try to build a consensus. and when a decision is made, it must be embraced. that isn ’ t happening right now

##rs has also changed. statutory boards used to dominate, but now form only 3 % of total issuance. instead, the debt market has a stable base of large corporates and financial institutions issuing bonds well over s $ 1 billion in issue size. this has increased liquidity in the secondary market. large international issuers such as ifc, freddie mac, fannie mae and adb, which can tap any market in the world, have chosen to raise funds in singapore. treasury markets have also stayed buoyant, as singapore remains one of the established leading global fx trading centres. the creation and hedging of structured products have boosted turnover in derivative markets. singapore now ranks 6th globally, in otc fx and interest rate derivatives. reforms were also introduced to deregulate the stockbroking industry. the industry has consolidated, operating more leanly on much lower commissions. the bigger local players have expanded their product range and also expanded overseas. more foreign players have entered the market. overall, investors have benefited from lower trading costs. sgx became the first demutualised, integrated stock and derivatives exchange in the asia - pacific in december 1999. it is now well placed to grow its business, and respond to developments in regional capital markets. more foreign companies are choosing to list in singapore. to date, there have been 47 listings by chinese companies, and a few indian listings are in the pipeline. sgx has also actively pursued alliances with other exchanges. its first securities co - trading linkage with the australia stock exchange allowed investors in the two countries to trade in each other ’ s market directly. sgx is also exploring linkages with asean securities markets. if this succeeds it will benefit the region as a whole. we have also grown as a processing centre. large financial institutions have centralised their regional and global processing operations in singapore. these house high value - added, mission - critical systems as well as back - office processing activities. in brief, our financial sector has become more dynamic and vibrant. many persons and institutions have participated in this process. their support, hard work and spirit of enterprise made this possible. i thank them all. developments in the banking sector let me now focus on the banking sector. the asian financial crisis underscored the importance of sound, resilient financial systems underpinned by strong domestic banks. the lessons of the crisis played a major part in re - shaping the banking industry. meanwhile, global trends such as consolidation among the major international