in eurozone bond yields has in the past also played a significant role in driving us treasury yields lower. this was evident during the eurozone crisis of 2011 / 12 and again in 2014 when the european central bank stepped up liquidity - provision measures and ultimately implemented qe earlier this year. as a result, the 10 - year bund traded below 1, 0 per cent in late 2014 and even closer to 0 per cent earlier this year. this pulled us treasury yields lower as investors switched out of low - yielding eurozone bonds into more attractive yielding us treasuries. interestingly, during the past week we have seen bund yields exerting upward pressure on us treasuries when the bund yields went above 1, 0 per cent for the first time since september 2014. aside from divergent monetary policy, financial markets have in recent months also been affected by a variety of uncertainties in the global environment. these include the still relatively low oil prices, the possibility of greece exiting the euro area and its likely impact on the latter ’ s already - weak economic performance, the changing chinese growth model and therefore slower economic growth, and the us dollar appreciation as markets get ready for the fed ’ s lift - off. although markets have, to some extent, priced in the lift - off by the fed, there remains considerable uncertainty regarding the timing and extent thereof. south african markets and global monetary policy normalisation as financial markets and systems became more integrated in recent years, the monetary policy cycles of major economies also became increasingly important for emerging - market economies. the impact from us monetary policy normalisation could transpire through two channels : firstly the real channel ( trade ), and secondly the financial channel. the real / trade channel implies that us policy tightening is associated with an acceleration in economic growth, with subsequent spillovers for emerging - market economies. south africa is unlikely to directly benefit to any significant degree from this channel, given that the us portion of our exports is only approximately 8 per cent compared to 21 per cent for the euro area. the financial channel is much more important for us, whereby us policy tightening triggers a reallocation in financial assets, for example, in south africa ’ s case, portfolio outflows with a subsequent impact on the various asset classes. let us take the “ taper tantrum ” as another example. similar to other emerging - market economies, portfolio inflows into south africa declined in the aftermath of the “ taper tantrum ”

daniel mminele : global monetary policy normalisation and south african financial markets address by mr daniel mminele, deputy governor of the south african reserve bank, at the annual conference of the bureau for economic research, johannesburg, 12 june 2015. * * * introduction good morning, ladies and gentlemen. it is a pleasure to address you at this annual conference of the ber, and thank you to the ber for inviting me. let me take the opportunity to express our appreciation for the work that the ber has been doing over the years : a research house that has built a local and international reputation for excellence since its establishment in 1944, making it one of the oldest economic research institutes in south africa. the ber also contributes towards sound monetary policy by conducting the quarterly inflation expectations survey on behalf of the south african reserve bank, which, as you know, is an important piece of information for an inflation - targeting central bank. it has been approximately seven years since the global financial crisis began – more or less the period which reinhart and rogoff 1 predicted it would take the global economy to recover from the crisis and set the scene for monetary policy normalisation. the global economic environment continues to be characterised by various global headwinds, not least of which is the return to “ normal ”. my remarks this morning will focus on the period after the global financial crisis, what it means for south african financial markets, and the resulting policy implications. i will also briefly touch on how international forums are dealing with the uncertainty and volatility created by divergent monetary policy. after the global financial crisis, or the gfc reflecting on the post - gfc period, the first thing that comes to mind is the set of spill - over effects from almost seven years of extremely loose and accommodative monetary policy in advanced economies. monetary policy developments in advanced economies – and the associated robust capital inflows to emerging markets chasing higher yields – supported financial market asset prices, lowered borrowing costs, and, for a while, created pressure on the us dollar to depreciate. however, policymakers at the time already warned that this unprecedented monetary accommodation was unchartered territory which created its own challenges, such as the so - called “ currency wars ”, and that ultimately the tide would turn and potentially have even more severe implications for emerging - market economies. indeed, the turning point came on 22 may 2013, when the then - chair of the federal open market committee,