and equity markets, and the significant improvement in south africa ’ s foreign exchange reserves position. however, the combination of being one of the most liquid of the emerging market currencies and having a relatively wide deficit on the current account of the balance of payments has meant that the rand remains vulnerable to changes in international developments and sentiment. nonetheless, demand for rand remained strong as reflected in the strong increase in turnover in the foreign exchange market. the average daily turnover against rand doubled since 2002 from usd6 billion to over usd12 billion. according to the latest bis triennial survey, the rand ’ s share of total currency distribution in global currency markets increased from 0, 5 per cent in 1998 to almost one per cent in 2004. volatility in the domestic currency market has been on a declining trend since 2001 – implied volatility declined from almost 50 per cent in 2002 to 13 per cent in march 2007. 6. the outlook for global growth and markets so far, financial market corrections have been relatively well contained and brief, even against the background of a slowing us economy. this can most likely be attributed to what appears to have been a rebalancing of global growth and the adoption of appropriate economic policies. with regards to the latter aspect, there is little doubt that monetary policy has been fairly successful in containing inflationary pressures across the globe. strong growth elsewhere is expected to partly shelter emerging markets from a us slowdown. the effects are likely to be less severe than have been in the past, as the rest of the world has become more resilient to a us slowdown with reduced dependence on the us consumer. however, adverse developments in the us could affect equity markets, particularly investor sentiments towards emerging market assets. a further risk to global markets is that of the unwinding of yen carry trades. as noted earlier, in february 2007 markets reacted adversely to the bank of japan ’ s decision to raise interest rates by 25 basis points. in particular, the high - yielding currencies suffered the most, as investors unwound their long positions in these currencies and reduced their short positions in the yen. however, at this stage, the market is pricing in a modest scenario of interest rate increases. similarly, in china, with fixed investment and economic growth exceeding expectations, the authorities have signaled their intentions of cooling down the economy. however, there are market concerns that further policy tightening could adversely impact on chinese and world economic growth. given the prominent role of china

( such as greece ) are dealing with problems typical of developing countries, issues including incomplete land registries and an insufficient basic ability to collect taxes. this confusion in taxonomy complicates our discussion a great deal, especially in the years of the crisis and its aftermath. the question at the beginning of the crisis was : who in europe will prove to be most vulnerable to shocks? many believed it would be central and eastern european countries. but, in contrast to that prophecy, at the end of the day the countries that did not have to bail out any of their financial institutions were, with one exception ( malta ), located typically in the cee region. so it seems to me that gdp per capita, human development and industrial tradition are not the criteria driving the market ’ s classification of “ emerging ” economies. should euro membership automatically make a country “ developed ”? in other words, does giving up independent monetary policy make a country more “ stable ”? but why, then, isn ’ t bulgaria considered a developed country, when it holds a fixed exchange rate against the euro? why not kosovo and montenegro, which have adopted the euro unilaterally? much space has been devoted to the so - called decoupling debate, in which many experts 1 / 2 bis central bankers'speeches claimed that emerging countries were less affected by the global financial crisis. but with the benefit of hindsight, we now know that the gdp declines in emerging countries were, on average, just as steep as those experienced by developed countries. a part of the explanation, once again, lies in the confusing taxonomy : we see huge differences among individual emerging countries as well, even within brics. i suggest an analogy to the decoupling debate : we are now observing a “ brics decoupling ” to the power of two : only china and india have shown robust growth since the great recession. russia, brazil and south africa have been stagnating, each for its own specific reasons. but despite these differences, a common theme arises : emerging markets dependent on the production and export of raw materials ( russia, brazil and south africa serve as good examples ) are less resilient than countries dependent on vigorous labour force and innovations ( exemplified, within brics, by china and india ). there are also differences in resilience among the “ emerging ” countries of central europe. during the great recession, poland – a big country ( by central european standards ), less open and with greater potential