##nated debt, from the public or private sectors, may be an even more serious problem. ricardo hausmann has described it as the “ original sin ” of emerging markets, by which he meant that ems are unable to borrow long - term in local currency, leading to debt profiles riven with currency and maturity mismatches. the problem with foreign currency debt is that if the exchange rate falls, the debt burden rises. the results can be likened to a bank run, with rising debt burdens deterring foreign lenders, weakening the currency and pushing debt burdens even higher, deterring more lenders, and so forth. south guillermo a. calvo, alejandro izquierdo, and luis - fernando mejia, “ on the empirics of sudden stops : the relevance of balance - sheet effects ” nber working paper no. 10520, http : / / www. nber. org / papers / w10520. pdf, may 2004, see pablo e. guidotti, federico sturzenegger, agustin villar, jose de gregorio and ilan goldfajn, “ on the consequences of sudden stops ” economia, vol. 4, no. 2 ( spring, 2004 ), pp. 171 – 214 ; calderon, c. and m. kubota ( 2013 ) : “ sudden stops : are global and local investors alike? ”, journal of international economics, vol. 89, pp. 122 – 142 see http : / / www. voxeu. org / article / mother - all - sudden - stops. bis central bankers ’ speeches africa ’ s debt, however, is mostly rand - denominated, so investors bear the currency risk. we do not suffer much original sin. south africa is therefore equipped to handle a shock like the end of qe without suffering a sudden stop. although the current account deficit should prompt depreciation, a flexible currency and rand - denominated debt protect sa. this confidence that we can avoid a sudden stop is also supported by independent measures of country vulnerability. nomura global economics has recently compiled an index meant to show vulnerability to a currency crisis, meaning a shift of three standard deviations from the two year average. south africa is comfortably within the safer group of countries, ahead even of countries like china, israel and chile. in september 2013 the economist magazine produced a similar index, measuring the likelihood of a capital freeze. this showed a much more disturbing result

sales. corelogic report shows home prices rise by 12. 1 percent year over year in april. bis central bankers ’ speeches as is always the case, there is substantial uncertainty surrounding this forecast. moreover, there is always the possibility of some unforeseen shock. thus, we will be monitoring u. s. and global economic conditions very carefully and will adjust our views on the likely path for growth, inflation and the unemployment rate accordingly in response to new information. at its meeting last week, the fomc decided to continue its accommodative policy stance. it reaffirmed its expectation that the current low range for the federal funds rate target will be appropriate at least as long as the unemployment rate remains above 6. 5 percent, so long as inflation and inflation expectations remain well - behaved. it is important to remember that these conditions are thresholds, not triggers. the fomc also maintained its purchases of $ 40 billion per month in agency mbs and $ 45 billion per month in treasury securities, with a stated goal of promoting a substantial improvement in the labor market outlook in a context of price stability. in its statement, the fomc said that it may vary the pace of purchases as economic conditions evolve. as chairman bernanke stated in his press conference following the fomc meeting, if the economic data over the next year turn out to be broadly consistent with the outlooks that the fomc sees as most likely, which are roughly similar to the outlook i have already laid out, the fomc anticipates that it would be appropriate to begin to moderate the pace of purchases later this year. under such a scenario, subsequent reductions might occur in measured steps through the first half of next year, and an end to purchases around mid2014. under this scenario, at the time that asset purchases came to an end, the unemployment rate likely would be near 7 percent and the economy ’ s momentum strengthening, supporting further robust job gains in the future. here, a few points deserve emphasis. first, the fomc ’ s policy depends on the progress we make towards our objectives. this means that the policy – including the pace of asset purchases – depends on the outlook rather than the calendar. the scenario i outlined above is only that – one possible outcome. economic circumstances could diverge significantly from the fomc ’ s expectations. if labor market conditions and the economy ’ s growth momentum were to be less favorable than in the f