to many of these medium to small banks exiting from the banking system. this downward trend reached its lowest point with the placement of saambou bank into curatorship in february 2002 and the subsequent integration of boe bank into nedbank. from the last quarter of 1999 to the end of march 2003, some 22 banks exited the south african banking system. it can be said, however, that this phenomenon was due more to a consolidation of the broader banking sector than a failure of the medium to small banking sector. currently, small local banks constitute 3. 1 per cent of the total banking sector assets, in comparison to 21. 7 per cent in 1994. as a result of the political isolation of south africa in the mid - 1980 ’ s, international banks terminated their operations in south africa. immediately prior to the advent of the democratically elected government in 1994, few international banks were doing banking business in south africa. amendments to the banks act in 1994, however, allowed not only representative offices and subsidiaries of international banks to be established in south africa, but also branches of international banks. following the opening of south africa ’ s financial system in 1994, international participation in the local banking industry increased significantly, from 3 per cent in 1994 to 9. 5 per cent of total banking sector assets by the end of october 2004. 1 / 7 3. periods of change in the banking sector following south africa ’ s re - entry into international financial markets in 1994, locally registered banks have increasingly been expanding their operations into other countries. at the same time, international banks have been expanding their operations into south africa. besides adding further depth and sophistication to the south african market, these foreign banks began to tap into the south african labour market. consequently, the arrival of these predominantly resourceful and experienced banks posed formidable challenges to local banks. in a quest to survive and excel, south african banks had to devise means to adapt to the new terrain. as a result of the increased competition, lending margins have been placed under greater pressure, and several banks have had to expand their businesses and enter markets with slightly higher credit - risk profiles. currently, the major banks offer a wide range of services to both individual and corporate customers. one - stop relationship banking, with an emphasis on universal banking, instead of isolated services, has gained in importance during the past few years. nevertheless, several banks, especially small local and foreign banks continue to service niche markets, where they hold some form of competitive advantage.

at this stage warrant a reassessment of the current monetary policy stance. as in the past, the ecb ’ s monetary policy will be forward - looking and geared towards a medium - term horizon. it will not respond to short run fluctuations. sustained adjustment in the path of inflation to levels below, but close to 2 % over the medium term still requires very favourable financing conditions, which remain predicated on a very accommodative monetary policy stance. we still need to build sufficient confidence that inflation will indeed converge to this aim over a medium - term horizon and will remain there even in less supportive monetary policy conditions. monetary policy can support the absorption of economic slack, but it cannot strengthen potential growth. the current track record of the euro area economy is encouraging when judged against the subpar performance in the post - crisis years. but it is insufficient when judged against the long - term challenges the euro area is facing due to the debt loads inherited from the crisis and the implicit liabilities created by its ageing societies. so while short - term risks to the economy have somewhat abated in recent times, growth - enhancing structural policies remain warranted to tackle persisting longer - term vulnerabilities. 1 / 1 bis central bankers'speeches