sultan bin nasser al - suwaidi : the extended importance of the euro speech by his excellency sultan bin nasser al - suwaidi, governor of the central bank of the united arab emirates, at the frankfurt european banking congress, frankfurt am main, 17 november 2006. * * * distinguished guests and speakers, ladies & gentlemen, it is my pleasure and honor to be here today, to speak at this important forum. thanks to the organizers, for their kind invitation. i will start by the euro area's gdp, which had grown continuously over the past five years, especially if we look at the figures as expressed in current prices and in us dollars. looking at the euro area's gdp would then prove that the euro had gained extended importance at a gdp figure of us dollars 9. 9 trillion at the end of 2005. also, if we look at what the euro area represents in world trade, we would find - out that it makes about 30 % of it, and the euro area is the largest single player in world trade, so europe / euro area is the " trade centre of the world ". having said this, let us look at the euro and the euro area from an outsider's point of view. in the gcc countries, we see the euro as the second currency in the world after the us dollar. this maybe explained, in part, if we look at the import figures and the currency of settlement for trade imports. if we study the figures of imports into the gcc countries, we will see that imports from the euro area have stayed almost static at about 20 - 21 % over the past five years. as an outsider to the euro, the gcc countries must have economic reasons to hold euros, one of these reasons is to pay for the import bill. in the case of gcc countries the import bill from the euro area has not increased in percentage terms, which means that trade needs for the euro within the gcc countries did not grow, as a matter of fact it declined slightly from 21. 84 % of all imports in 2001 to 20. 34 % in 2005. this is then the trade related needs for the euro in the gcc countries. the next question then ; which currency or currencies make - up the other 80 % of the gcc countries'trade related needs. it will be easy to predict if we know that 34 % of gcc imports come from asia, 11 % from usa and 35 % from all

. the tools necessary for addressing system - wide risks are commonly known as macroprudential tools. since the global financial crisis, it has become apparent that even if individual financial institutions appear sound, there may still be a risk of broader financial instability due to either excess leverage across the system or a high degree of common exposures to a particular risk. thus, the microprudential tools that have commonly been used to safeguard individual banks, such as minimum capital and liquidity ratios, need to be supplemented with a macroprudential approach to regulation. the sarb is currently researching a variety of potential macroprudential tools and financial stability risk indicators to improve the resilience of the broader financial system. the sarb ’ s financial stability committee has been set up to protect and enhance financial stability. it is tasked with considering qualitative assessments of the conjunctural assessments of risks to, and imbalances in, the broad financial system and formulating policy action to mitigate identified threats, as well as considering the appropriateness and adequacy of resolution policies and measures for crisis management. the sarb ’ s toolkit is continually being refined and includes the ability to deploy a countercyclical capital buffer for banks. this provides the sarb with the means to raise aggregate bank capital buffers during upswings in the financial cycle, and allows for the release of these buffers during downswings. currently, given the modest level of credit growth, the countercyclical capital buffer is set at zero. the fsr act has also established a twin peaks approach to financial regulation, which means that prudential and market conduct regulation are now managed by two separate entities. the sarb, as the prudential regulator, has received expanded oversight responsibilities extending beyond banks, to include insurers and financial market infrastructures. meanwhile, a new entity, called the financial sector conduct page 9 of 12 authority, has been established as the market conduct regulator. the fsr act meaningfully builds on south africa ’ s institutional strength within the financial sector by ensuring that the regulatory architecture is in line with best practices globally. in particular, establishing a clear separation between prudential and conduct regulation is an important reform because it ensures that there is adequate oversight of both the soundness of financial institutions and the fair treatment of clients. over the longer term, we believe that centralising financial regulation within the sarb will generate economies of scale and improve our ability to