example has declined by no less than 37 per cent in the calendar year 2000 and by a further 17, 6 per cent in the current year to date. according to bloomberg news services, the historical price volatility over a ten - day period reached levels in excess of 70 per cent per annum in april 2001. in early january 2001, the volatility appeared to be even higher. from its peak on 10 march 2000, the nasdaq has fallen by a staggering 58, 3 per cent. the dow jones index has also declined but not by the same magnitude. it declined by 5½ per cent during 2000 and has remained virtually unchanged in the year to date, with historical volatility reaching levels around 32 per cent in march and april of this year. other stock market indices have declined in sympathy with wall street. fortunately, as a matter of interest, the all share price index of the jse securities exchange has increased by some 5, 1 per cent since the beginning of 2000 to date. for most of the last decade the financial world has closely watched the economic expansion of the united states, which seemed to defy what had been learnt about business cycles, and the concomitant monetary policy tightening by the federal reserve from late 1999. similarly, in the euro area and in the united kingdom, both the ecb and the bank of england were also in monetary policy tightening modes for most of 2000. the tightening in the euro area and in the uk, however, was in reaction to inflationary pressures which resulted mainly from higher oil prices. based on a perception that monetary policy was entering an uncertain phase in the major economies of the world in the latter half 2000, plus given the demanding price earnings ratios on the so - called hi - tech shares especially, market participants seemed to react more forcefully to macroeconomic news than usual, thus exacerbating the volatility. stock markets in general turned positive in january 2001 with the announcement of a 50 basis points reduction in the federal reserve ’ s target for the fed funds rate on 3 january 2001. this was followed by a further 50 basis points cut on 31 january. this buoyed markets, at least temporarily. however, perceptions again deteriorated on fears that the united states might be heading for a recession which could eventually result in depressed world economic activity. a principal feature in the currency markets during 2000 and 2001 has been the strength of the us dollar in the international financial markets. one of the important factors behind the strong us

in a tightening phase of the interest rate cycle. while price stability remains the primary focus of monetary policy, the bank has indicated that this objective will be pursued in a manner so that economic growth outcomes are not unduly undermined. as we explained in the july mpc statement, monetary policy is on a “ gradual normalisation path ”, which will be highly data - dependent. the sarb remains committed to its mandate of maintaining price stability in the interest of balanced and sustainable economic growth in south africa. in this regard, it is important to note that despite the 75 basis point increase in the repo rate since the beginning of the year, the real repurchase rate is still marginally negative thus ensuring that monetary policy remains supportive of the domestic economy. 3. the new financial services regulatory regime in south africa the great recession, which began in 2008 has shown that imbalances between the real and financial sectors of the economy could increase the vulnerability of the financial system. in addition, with hindsight, we now know that such vulnerabilities may not become evident solely through the supervision of individual institutions. for this reason, macro - prudential aspects of financial stability have gained traction in policy circles around the globe. south african policymakers have also engaged in a process of reviewing and revamping the regulation of the financial sector. in february 2011, the minister of finance announced that south africa would be shifting to a “ twin peaks ” model of financial regulation. at the end of last year, the national treasury published the draft financial sector regulation bill ( twin peaks bill ), which provides some detail around the architecture of the twin peaks model. in terms of the twin peaks model, a prudential authority ( pa ) will be established within the sarb to oversee the safety and soundness of banks, insurers, financial conglomerates and key financial market infrastructures. the fsb will become the market conduct authority ( mca ) and will promote integrity and efficiency of financial markets in order to safeguard the interests of south african consumers of financial services. it goes without saying that co - ordination between the two regulators will be crucial to ensure the overall stability and robustness of the south african financial system. the exact date of twin peaks implementation will be finalised once the necessary legislative processes have taken place. it is envisaged that the twin peaks model of regulation will come into effect by the end of 2014 although this is dependent on the parliamentary process and the final enactment of the bill