the situation, and a unity of purpose at the global and national levels. an effective response requires confidence and trust in leadership, and this appears to be lacking. the fractious nature of political processes seems to be making it bis central bankers ’ speeches difficult to have the level of coordinated and purposeful responses that the crisis demands. this is well illustrated by the debt - ceiling debacle in the united states, where some factions were willing to take the country and indeed the world over the brink. similarly, the inability of the leadership on the eurozone economies to agree on a credible and durable solution for the region has undermined support not only for the leadership but for the whole eurozone project. until now, there have been piecemeal responses to the european crisis, which have merely delayed the need for a credible solution. there are no easy or painless solutions, but the longer they are delayed, the more difficult and painful the outcome will be. it is not just the markets that have lost confidence, it is the ordinary people who are bearing the brunt of the consequences of the crisis. these social and the social consequences are becoming increasingly apparent and disturbing with a growing structural unemployment problem, particularly amongst the youth in some countries, and in a number of instances, increased civil unrest. the south african economy will not be immune to these developments. the economy has made a fragile and uneven recovery from the recession, but the future growth prospects will be affected significantly by global developments. favourable growth outcomes were achieved in the final quarter of 2010 and the first quarter of 2011, when annualised growth rates of 4, 5 per cent and 4, 8 per cent respectively were recorded. however the second quarter performance had been disappointing, with both the manufacturing and mining sectors likely to have subtracted from growth. the main driver of growth over the past quarters has been growth in household consumption expenditure, which has averaged around 5 per cent since late 2009. however, for some time the monetary policy committee of the bank has questioned the sustainability of this consumption growth given the slow pace of employment growth, high levels of consumer indebtedness, low levels of bank credit extension as well as negative wealth effects emanating mainly from the weak housing market. recent retail sales developments indicate that there may be some slowdown in the growth of household consumption expenditure. a worrying feature of the domestic recovery has been the slow growth of gross fixed capital formation, particularly by the private sector. this may be due in part to the relatively

daniel mminele : challenges today – opportunities tomorrow keynote address by mr daniel mminele, deputy governor of the south african reserve bank, at the african central bank reserves management 2020 conference, arusha, 1 december 2015. * * * good morning, ladies and gentlemen. it is indeed a privilege to have been invited to deliver the keynote address at this prestigious african central bank reserves management conference. i would like to thank the bank of tanzania, allianz global investors, and the deutsche gesellschaft fur internationale zusammenarbeit ( giz ) for affording me the opportunity to share some thoughts regarding the challenges and opportunities we face in managing official reserves. thank you also for creating this valuable opportunity to discuss and swap notes on best reserve management practices. the ever - changing landscape in the financial markets poses significant and exciting challenges for reserves managers, but change can also bring new opportunities, which could require a rethink in the way that central bankers manage official reserves. as is always the case with change, new risks also emerge. this is even the case when considering only the primary objective of capital preservation, for which historically there were seemingly simple solutions. in the not so distant past, there was a clear formula for achieving capital preservation by placing deposits with aaa – rated counterparties or buying highly rated government bonds. however, holding government bonds in the current environment may not necessarily guarantee capital preservation. for instance, in countries such as germany, negative yields prevailing in the short to medium maturity notes actually guarantee not being able to achieve capital preservation. how to deal with negative interest rates is just one of the challenges we face as reserves managers. judging by the structure of the agenda and the speakers for this conference, i have no doubt that many other issues will be unpacked, to help enhance our understanding as we grapple with these extraordinary economic circumstances that have created today ’ s trying conditions under which reserves managers have to operate. in my remarks this morning, i will touch briefly on the global economic and financial markets context ; then talk about recent developments in reserves management, and the challenges currently facing central bank reserve managers. before exploring, towards the end of my remarks, possible opportunities stemming from this changing global landscape, as we cast our eyes out to 2020, i will briefly share with you how we at the south african reserve bank ( sarb ) have been thinking about and approaching these challenges. recent economic and market trends due to the global financial crisis in 2007 and 2008, there was coordinated global