services and supporting processes in line with customer interests and conduct regulation. ( iii ) capital and liquidity risk internal audit should include within its scope the management of the organisation ’ s capital and liquidity risks. conclusion after much discussion and debate, we have to accept that, after nearly seven very challenging years, new challenges are being faced, which poses specific risks for emerging economies in particular. some of these challenges include the unwinding of the extraordinary monetary policy actions in the us which is largely untested territory as there is no prior history to guide us. nonetheless, i will not delve into this topic at present as we could spend many hours discussing the various issues surrounding it. let me stop here and thank you for the opportunity to talk to you today and to share a few ideas on the fascinating topics of financial stability and corporate governance. there is no question that good corporate governance and sound accounting and auditing standards and effective audit functions contribute significantly to sound, stable and well - functioning financial systems. thank you. bis central bankers ’ speeches

cent for the next two years. this clearly reflected government ’ s commitment to the adjustment of policies to bring the inflation rate down to lower levels. secondly, the external value of the rand began to depreciate sharply in september. the pass - through from the depreciated exchange rate to inflation had been surprisingly muted in 2000, but the sharp downward movement of the rand in the last quarter of 2001 inevitably had a significant impact on inflation. before this change the challenge to monetary policy had been how to deal with external shocks that had not been putting undue pressure on domestic inflation. the new challenges were how to deal with external shocks that were now beginning to have a significant impact on current and expected inflation, and to avoid an inflation spiral. inflationary pressures began to pick up during the last quarter of 2001. food prices were initially the main factor contributing to the acceleration in inflation. these food price increases were partly related to the depreciated value of the rand as domestic prices approximated those determined internationally since the deregulation of agriculture. in particular, maize prices were significantly affected by the depreciation in the value of the rand. the maize price has wide economic significance in south africa. white maize is a staple food for many south africans and 90 per cent of yellow maize is used as feed in the meat, dairy, poultry and egg industries. apart from the depreciation of the value of the rand, supply and demand factors also contributed to the more than doubling of the spot prices of both white and yellow maize between june 2001 and january 2002. later the increase in consumer prices became more broadly based, in line with the sharp depreciation of the currency. rising expectations of price increases became an important factor in the inflationary process, as was clearly reflected by the pre - emptive buying of durable goods by households in the fourth quarter of 2001. as the depreciated rand pushed prices higher, the twelve - month rate of increase in the cpix started moving upwards from the psychologically important level of below 6 per cent in september 2001 to 9, 9 per cent in july 2002. the quarter - to - quarter rate of increase in cpix inflation was even more pronounced, rising from a seasonally adjusted and annualised level of 6, 8 per cent in the fourth quarter of 2001 to 11, 6 per cent in the first quarter of 2002 and 12, 1 per cent in the second quarter. the twelve - month rate of increase in the all - goods