funding ratio calculates the proportion of long - term assets which are funded by long term, stable funding. bis central bankers ’ speeches qualitative impact, it is not possible to measure it at this stage, while the impact will differ according to each country ’ s initial conditions. these are the issues which central banks are grappling with today and the challenges they present for the conduct of monetary policy going forward. the new basel requirements do not suggest that there needs to be any changes to the south african monetary policy implementation framework, unless we change the operating framework from the current classical cash reserve system to an overnight targeted rate framework. south africa ’ s money markets are not yet sufficiently developed to potentially justify a change from the current classical cash reserve system operating framework to an overnight target rate framework. this segment of the market needs to be developed much more, and this forms part of the on - going work at the bank in consultation with market participants such as the money market subcommittee of the financial markets liaison group. thus, at least over the medium term, the monetary policy implementation framework in south africa is unlikely to be affected by these regulatory changes, however, they will have an impact on the monetary policy transmission mechanism and therefore on monetary policy and interest rates and need constant monitoring. 5. conclusion in conclusion, the global financial crisis has forced a rethink about monetary policy and financial stability, resulting in new macro prudential frameworks. the consequences thereof are still unknown but could have significant implications for the conduct of monetary policy and the institutional set up of central banks. what is certain is that the operating procedures of central banks will become much more complicated, with a much wider variety of tools available. i thank you bis central bankers ’ speeches

turning now to the australian labour market, the unemployment rate, at 5. 2 per cent, is a little higher than when we met six months ago. this is despite employment growth having been stronger than we had expected. what has happened is that increased demand for labour has been met with more labour supply, especially by women and older australians. reflecting this, a higher share of the australian adult population is participating in the labour market than ever before. this is good news. but one side - effect of this flexibility of labour supply is that it is harder to generate a tight labour market and so, in turn, it is harder to generate a material lift in aggregate wages growth. looking forward, while some slowing in employment growth is expected, the central scenario is for the unemployment rate to move lower to reach 5 per cent again in 2021. if things evolve in line 1 / 4 bis central bankers'speeches with this central scenario, it is probable that we will still have spare capacity in the labour market for a while yet, especially taking into account underemployment. this means that the upward pressure on wages growth over the next couple of years is likely to be only quite modest, and less than we were earlier expecting. caps on wages growth in public sectors right across the country are another factor contributing to the subdued wage outcomes. at the aggregate level, my view is that a further pick - up in wages growth is both affordable and desirable. turning now to inflation, the june quarter outcome was broadly in line with expectations, after a run of lower - than - expected numbers in earlier quarters. over the year to june, inflation was 1. 6 per cent, in both headline and underlying terms, extending the period over which inflation has been below the 2 – 3 per cent medium - term target range. the reserve bank board remains committed to having inflation return to this range, but it is taking longer than earlier expected. there are a few factors that i would highlight as contributing to the low inflation outcome over the past year. these are : the slow growth in wages ; the ongoing spare capacity in the economy ; various government initiatives to address cost - of - living pressures on households ; and the adjustment in the housing market, which has contributed to unusually low increases in rents and declines in the price of building a new home in some cities. working in the other direction, the drought and the depreciation of the exchange rate have been pushing some prices up. looking ahead, inflation is still expected to pick