hours. this project is necessitated by the need for local foreign - exchange market players to have a local fixing page for the rand. with the development of the currency futures market, it would provide quicker dissemination of fixing information across the market. a daily rand fixing will also enhance market transparency and can be used as an objective and verifiable reference rate for the settlement of foreign exchange transactions. through the fmlg and its subcommittees, a liquidity forum has been established, whose mandate is to deliberate on market liquidity including the viability of a collateralised interbank market. this forum will address other liquidity challenges and settlement issues that could arise. another area of important consultation and co - operation between the bank, through fmd and the banking supervision department, has been the operationalization of the committed liquidity facility ( clf ) as part of basel iii implementation. in may 2012, the banking supervision released a guidance note on the clf, which would be made available to banks to assist with meeting the basel iii liquidity coverage ratio ( lcr ). since then, market consultations on the outstanding issues around the clf have been concluded and the bank supervision department is finalising a revised guidance note, which will be issued together with an updated operational notice from fmd dealing with collateral arrangements for the clf. 4. reserves management the bank has continued to make good progress in enhancing its reserves management operations. during the past year the bank has faced numerous challenges in managing and maintaining high quality liquid foreign reserves portfolios in a low - yield environment, which was compounded by the on - going european sovereign debt crisis and numerous ratings downgrades. the bank did, however, benefit from the increase in liquidity and the improvement in the credit risk profile of its investments as the euro zone authorities and the international monetary fund ( imf ) have enhanced their efforts in solving the financial crisis. the bank remained prudent and risk - averse in its investment strategies and the bank ’ s holdings continued to be dominated by government bonds, supranational agency debt and high quality and short - term money market securities. the bank benchmarked and just recently completed a review of its investment policy and also reviewed the strategic asset allocation ( saa ), to take into account the current lowyielding environment and expectations of future monetary policy actions by major central banks. the new saa will encompass a wider variety of investments, in order to improve the diversification of reserves

, money is created by banking institutions through their lending and investment operations. the control over the money supply therefore becomes more difficult, and the central bank can only indirectly influence money creation with instruments such as interest rate variations, overall liquidity management, open market operations, and money market interventions. with the current liberalisation of financial markets and the tendency for an integration of financial services in gigantic multi - functional and multi - national financial conglomerates, the task to protect the value of the currency, that is, to keep inflation low, has become more difficult. the debate in the world of central banking about the introduction of e - money at this stage is therefore not only about the effects it might have on the use of, and the demand for, bank notes and coin, but also how it will change the role of monetary policy. will it still be possible, for example, to maintain control over the creation of money and the total money supply? how will it affect the spending habits of people? how will it influence cross - border trade and the balances of payments between countries? how will it change the velocity of circulation of money, and the savings of the community? 4. central banking in the 21st century with changes in the concept of money and the use of coins and bank notes, and with the introduction of electronic money, satellite communication and financial globalisation, central banks and the modus operandi of monetary policy will also have to change to adapt to the new environment. it will no longer be sufficient to define money - creating institutions ( banks ), and to manage the defined monetary liabilities of these institutions in our efforts to protect the value of the currency. the effective definition of money as a means of payment changed over the centuries from objects of value ( gold and silver ), to fiduciary issues ( bank notes and coin ), and then to deposit - money created by banking institutions. to this will now be added e - money and payments made through electronically operated global systems ( the internet ). central banks will have to adjust their monetary policies to affect, most probably through indirect market - based measures, these new methods of payment and the creation of additional purchasing power. central banks will have to operate more on a universal basis, as the banks and the suppliers of conventional and new money instruments will operate globally and beyond the borders of any individual nation - state. central bankers of the world will be forced by circumstances to work more closely together, not only in the control over banking and other