the operating target. as long as such open - market instruments are easy to implement and effective, and as long as the central bank ’ s target is made clear, there should only be limited, short - lived deviations of the overnight rates from the target, as is the case for the us federal funds rate. page 11 of 13 developing multiple rates and improving the existing set of benchmarks also has benefits for financial stability policy decisions. it is our view that, where such benchmarks provide a more accurate reflection of the interest they measure across the term structure, they can enhance existing frameworks for systemic risk identification and monitoring. an important aspect of our assessment of financial stability risks at the sarb focuses on monitoring both time - varying risks and cross - sectional risks at any point in time. in both instances, we monitor risk factors that could amplify or propagate the levels of vulnerability in the financial system as a whole, or in individual financial entities. this assessment depends on reliable and efficient measures of credit and market risk, some of which depend on benchmark rates that measure the cost of funding in the financial markets. for cross - sectional risk, our financial stability analysis also considers, among other things, the network structure of the south african overnight interbank market, by employing measures from network theory as well as the network systemic importance index ( nsii ) that assess the systemic importance of individual banks in south africa. the nsii measures each bank ’ s size, interconnectedness, and substitutability by employing network theory. we believe that the development of interest rate benchmarks such as the zaribor, which provide a clearer picture of an otherwise opaque overnight interbank market, will assist us further in understanding the interconnections in this segment of the market and the risks embedded therein. concluding remarks in conclusion, i think it is clear that the transition to new interest rate benchmarks is still uncertain, but the process has started to develop transition plans. while the timing of implementation might be uncertain, and while the plans might be fraught with complications, benchmark regulators are unlikely to reverse the decision to reform rates. it is therefore in the interest of all stakeholders to start positioning themselves for a new interest rate benchmark dispensation instead of adopting a wait - and - see approach. page 12 of 13 while the transmission of monetary policy is effective in south africa, as policymakers we also care about enhancing the credibility and transparency of money market interest rates because

that offers us an opportunity to have greater clarity on the dynamics of the transmission mechanism. in the context of monetary policy frameworks that target short - term unsecured interest rates, the sooner we embed these new interest rate benchmarks, the sooner the effectiveness of those price - based frameworks can be enhanced. interest rate benchmarks are also relevant for financial stability policy, including through effective risk sharing and transfer when risk can be measured more clearly. we believe that, with the assistance of the private sector through the mpg, we will be able to create a more robust financial market structure that will not only reduce systemic risk, but also add to transparency and allow for more efficient implementation of monetary policy. thank you. page 13 of 13