##chler news conference in order for saron to be used as the reference rate for cash products, a longer - term interest rate must be calculated from the daily rate. as early as 2018, the nwg recommended various options for calculating an average interest rate based on realised saron values. this approach, known as compounding, is also gaining traction abroad. a wide range of options for calculating such average rates has been proposed and evaluated. at its latest meeting, the nwg was more specific and narrowed down its set of recommended options. 1 as a result, market participants can now begin embedding the compounding approach in products such as mortgages. in addition to new saron - based cash products, solutions must be found for existing liborbased products. ideally, these will be replaced by new, saron - based contracts. at the very least, the existing contracts must be furnished with fallback clauses, which will come into effect when libor is no longer available as a reference rate. i should stress that it is evident that the swiss franc libor will cease to exist. the stage has been set for the transition to saron, and it is now up to market participants to use the time until the end of 2021 to complete the work that remains to be done. a successful transition from libor to saron is crucial for the smooth functioning of the swiss franc money and capital markets. importance of climate risks for the snb ’ s investment policy i would now like to say a few words about the importance of climate risks for the snb ’ s investment policy. let me start by summarising this policy. our asset management is governed by the primacy of monetary policy. in applying its investment policy, the snb has two main objectives. the first is to ensure that the balance sheet can be used for monetary policy purposes at any time. in particular, the snb must be in a position to expand or shrink its balance sheet if needed. the second objective is to preserve the value of currency reserves in the long term. a high degree of asset liquidity and diversification is required to ensure sufficient room for manoeuvre in the implementation of monetary policy. as the snb does not pursue any strategic or structural objectives with its investments, it seeks to achieve the broadest possible market coverage in managing its assets. so what do climate risks mean for the snb ’ s investment policy? in the context of investment policy, climate risks are

x p guma : the south african economy and financial markets – outlook, risks and policy responses address by dr x p guma, deputy governor of the south african reserve bank, to the south africa economic conference ” business unusual ”, johannesburg, 4 september 2008. * 1. * * introduction our meeting here today occurs during a period of considerable uncertainty : financial turbulence in the major industrialised economies being the proximate cause of international uncertainty ; with a variety of factors impacting upon the short - term indicators of domestic economic performance. it is, therefore, appropriate, i think, to attempt to place recent economic developments in some perspective as this may go some way towards piercing the veil of gloom which appears to have descended over this and other economies. and, for this reason, i thank the organisers of this conference for according to me the opportunity to participate in these discussions. 2. overview of key economic indicators : south africa in order to assess the south african economy ’ s performance over the medium - term, i have chosen to divide the period from 1990 to 2007 broadly into five - year segments, as indicated in tables 1a and 1b : namely, the periods 1990 - 1994 ; 1995 - 1999 ; 2000 - 2004 and finally, the most recent period 2005 - 2007. as these tables show, real gross domestic product grew at progressively increasing rates throughout this period : from an average rate of 0. 2 per cent during 1990 - 1994 to an average rate of 5. 2 per cent during the most recent period. the strongest sectoral growth occurred in the secondary and tertiary sectors, with growth reaching levels, on average, of 5. 8 per cent and 5. 7 per cent, respectively, over the period 2005 - 2007. the economy has become more open with the sum of exports ( x ) and imports ( m ) as a percentage of gross domestic product ( gdp ) increasing progressively, from 40. 6 per cent on average, between 1990 and 1994 to 61. 6 per cent on average during the period 2005 - 2007. and inflation, as measured by the consumer price index ( cpi ), had decreased progressively from an average annual rate of 12. 5 per cent in the early period, to an average rate of 5. 1 per cent during 2005 - 2007. 1 developments in the financial markets have, in general, been consistent with those described above regarding the real sectors of the economy. stated briefly, the assets of the banking sector have increased substantially ; from a nominal value of r281