role for special drawing rights ( sdrs ). while i will not elaborate on each of these initiatives in all detail, i would like to argue that in pursuing our goals we have to make sure that we do not indiscriminately buy insurance against future crises. we also have to carefully consider the cost of insurance. in particular, we have to weigh this cost against that of making an effort to invest in pre - empting the failure of the system in the very first place. the sdr, for instance, is not a cure - all for the international monetary system. the crux of the system is not the international use of national currencies, but the myopic use of domestic policies for achieving short - term gain at the cost of long - run pain. assigning a more prominent role to the sdr by increasing allocations would hence by no means prevent the build - up of excessive reserves in countries which accumulate them for reasons beyond precautionary motives. it is not clear either to what extent enhanced access to imf lending reduces the incentives for the accumulation of large excess reserves. in fact, the imf has already modified its lending toolkit and multiplied its resources. a flexible credit line was introduced, as well as a precautionary credit line for countries which do not meet the high qualification requirements for the former. in the absence of a counterfactual it is impossible to give a reliable estimate of the impact of these measures on global reserve accumulation. looking at the data, however, i dare speculate that if anything the impact has been very limited. and also where the insurance motive of reserve accumulation prevails, it is not clear that enhanced access to imf lending and regional pools, sdr allocations, or other forms of global liquidity provision could reduce the stigma attached to such external financing and thus avoid the further build - up of precautionary reserves. the cost of these insurance policies, on the other hand, can be substantial. large - scale “ issuance ” of sdrs could interfere with the implementation of monetary policy. together with badly designed multilateral coordination on global liquidity conditions these could undermine central banks´ authority as the ultimate provider of liquidity and thus dangerously impinge on central bank independence across the globe. at the same time, any schemes of cross - border liquidity provision at the global or regional level need to involve central banks, because only these can provide the needed amounts of liquidity

low levels, and while equity prices have performed strongly, home prices have broadly stagnated in real terms. admittedly, growth in loans and advances to the private sector slowed in 2016, from almost 9 % year on year in late 2015 to a low of 4. 5 % in november last year. yet this deceleration proved milder than in previous downward phases of the business cycle. confidence in the retail banking sector, as measured by the ey financial services 4 this refers to the world bank ’ s definition of ‘ upper - middle income ’, which comprises 56 countries. page 4 of 11 index, remains above par, in contrast to the other major sectors of the domestic economy. civil cases for debt and insolvencies are below the average of the past decade, even though surveys show that consumers are feeling increasingly vulnerable. 5 as for the savings ratio of households, while it rose from - 2 % of disposable income in 2013 to around 0 % thus far in 2017, it is only back to the levels last seen after the global recession in 2008 and remains very low by historical standards. rather than ‘ a traditional recession ’, then, what south africa experienced was ‘ a slow grind to a halt ’ that was driven more by long - term supply factors than by long - term demand factors. admittedly, several external factors, besides short - term domestic disruptions, contributed to the weakness in gdp growth. the recovery in world demand since the global financial crisis has been sluggish and has displayed low trade intensity by historical standards. for example, the average annual real import growth in south africa ’ s export markets – as measured by the oecd6 – amounted to only 3. 0 % in the last five years and 2. 1 % in 2016, compared to the 8. 6 % in the five years leading up to the global recession. 7 and this was not just a volume story : the prices of domestic commodity exports also fell, resulting in a decline in south africa ’ s terms of trade by 7 % between 2011 and 2014. on the domestic front, the drought that affected south africa over the 2015 / 16 summer season resulted in an 8 % contraction in agricultural output last year, which shaved off 0. 2 % from the 2016 gdp growth. safety - related stoppages also affected mining production in 2016. yet both these external and domestic factors do not explain the full extent of the economic slowdown. nor do they explain why our domestic economy,