this growth, as reserve holdings were increased to provide a form of insurance against future balance of payments crises. the expansion in global liquidity since the 2008 global financial crisis further provided encouragement to increase reserve holdings, as central banks tried to limit appreciation pressure on exchange rates emanating from the surge in capital inflows, and hence intervened in the foreign exchange markets and by so doing, increased their holdings of foreign currency. south africa certainly benefitted from the abundance of global liquidity in many ways, and also used this period to build up our foreign exchange reserve levels. this was done through a combination of direct purchases ( mostly related to large fdi transactions ) as well as opportunistic purchases in the foreign exchange market. the bank, together with the national treasury, considers various formulae when assessing what should be the optimal level of reserves for a country such as ours. we look at both an adjusted greenspan - guidotti rule, as well as the jean - rancierre model, both tweaked to take into account the specifics of the south african economy. the level which is arrived at provides a guide to what would be an adequate level of reserves to hold to protect against external vulnerabilities, however, this bis central bankers ’ speeches is not considered a hard target which has to be reached at all costs. it is for this reason that we have decided to not publicly release any such indicative levels or ranges. these numbers also tend to change quite a bit from year - to - year, largely influenced by the assumptions made and various forecasts used. the costs involved in accumulating reserves are always considered alongside the benefits of higher reserves, as at some point, the costs of accumulating reserves may far outweigh the benefits to be had. the composition of reserves assets has also changed over time and reserve managers have become more comfortable with and therefore gradually moved to riskier assets. bearing in mind the low yielding environment we found ourselves in post - 2008, with increased levels and costs associated with holding reserves, asset allocation decisions were influenced towards a greater focus on returns. reserve managers have explored different avenues to achieve this, including : • diversification in the currency composition towards non - traditional reserve currencies such as the korean won, new zealand dollar, australian dollar and canadian dollar. however, the diversification into alternative currencies as opposed to traditional currencies remains quite small as an overall proportion of reserves, around 3 per cent, given that

. central banks face important challenges in several areas, such as determining the timing and extent of reversing policy easing, coordinating with fiscal authorities and other central banks, and communicating their strategies to the public. a disciplined analysis of the data will test the science of central banking, whereas a good assessment of the operating environment and judgement will put the spotlight on the art of central banking. finally, i would like to congratulate all the nominees for this year ’ s spire awards. whether you or your team walk away with a prize or not, the fact that you were nominated is indeed already a great recognition by your clients and your peers for the contribution you have made to the south african bond market. i thank you all for your attention.