or impossible for the recipient of an electronic payment, or even for an issuer, to detect an electronic counterfeit. telephone card fraud alone for example cost telkom more than r13 million in the three financial years ending august 1999. by contrast, counterfeit currency can usually be detected by a recipient and the reserve bank as issuer scrutinises banknotes and coins carefully to prevent counterfeiting. sophisticated security features will reduce the risk of successful electronic counterfeiting, but with the lucrative possible returns it will be difficult to rule them out. issuers will therefore have to take great care to ensure that the dangers of counterfeiting is minimised, and they should be vigilant in monitoring their systems and operations so that counterfeiting is quickly detected. even more important is that when south african residents get involved in payment arrangements which are effectively domiciled outside south africa, they need to understand who it is that they are dealing with, where the counterparties are legally located, whether they have an appropriate standing, and what potential risks they may face – either by holding balances within a system, or by using those balances in a transaction. this information may not always be readily available or may be difficult to evaluate. both the holders of new forms of electronic money, and the issuers, face potential risks in certain circumstances. some of these are reasonably easy to understand and evaluate, and may not be any more serious than the risks which exist at present, such as losing your wallet. however, the risk characteristics of schemes involving elements such as multiple issuers, many members, many business organisations, multiple jurisdictions, delay or complexity in any settlement arrangements, or lack of any audit trails are most certainly not all straightforward. 6. conclusion the introduction of e - money and for that matter all forms of e - commerce will accordingly create new problems for the business community, but will also create new opportunities for a more efficient payment system. the reserve bank is not too concerned about these new developments at this stage. customer needs are likely to be best met through effective competition, and this will require that genuine choices amongst alternative products are available. fast and efficient means of pricing trades, handling client relationships and redesigning distribution structures are being enabled by the internet. more widespread uses of these new methods will create opportunities for financial innovations. however, the bank will be watching these new developments carefully, in order to ensure that the integrity of south africa ’ s financial system is always maintained.

work underway in trying to understand exactly what all this means. so while central banks may have perfected the art of monetary policy in the last decade, they have also undergone a tectonic shift in the last few years, which still has some way to go. 3. emerging markets and capital flows one of the consequences of the easy monetary policy employed over the past few years has been the surge in capital flows to emerging market economies. the institute of international finance ( iif ) records that net private capital inflows to emerging markets increased from just below us $ 200 billion in 2002 ( 1, 5 per cent of gdp ) to us $ 908 billion in 2010 ( 7 per cent of gdp ). the iif estimates that inflows will rise to us $ 960 billion in 2011 and to over us $ 1 trillion in 2012. these inflows reflect a combination of greater macroeconomic fundamentals in emerging markets, significant fiscal deterioration and loose monetary policy in advanced economies, and the increased integration of emerging economies into international capital markets. many emerging market economies have taken various actions towards curbing capital inflows in an attempt to limit currency appreciation. measures considered and implemented range from taxes on inflows, limits being placed on government bond investment by foreigners, to pre - announced currency market intervention programmes, just to name a few. south africa too has experienced large capital inflows, with the resultant upward pressure on the exchange rate of the rand. a favourable fiscal position, deep and liquid capital markets and sound macroeconomic policy have made the country an attractive destination for portfolio inflows. south africa has studied the measures imposed by other emerging market economies, but questions the efficacy of most of these measures. furthermore, it is doubtful that such measures would be appropriate for south africa given our savings / investment the role of central banks after the crisis, mr jaime caruana, general manager of the bis, january 2011. bis central bankers ’ speeches imbalance and dependence on portfolio flows to finance our current - account deficit. like the philippines, where measures to encourage greater capital outflows were implemented, so too has south africa lifted some of the limits on outward investments for local pension funds, insurers and individuals. south africa has also taken advantage of strong capital inflows to increase the level of foreign - exchange reserves. gross reserves have increased by approximately us $ 9, 6 billion since january 2010 to us $ 49, 3 billion in march 2011. of this amount, an