recently, in india, a development platform with the promise to reverse several years of sub - par growth and high inflation is being pursued. the lesson to take from this is that we are not helpless in the face of economic disappointment, of high inflation and low growth. for monetary policymakers, with limited tools, this situation provides no attractive choices. but there are many appealing options available for other aspects of policy. for south africa, our present predicament should be read as an invitation to embrace reform. the national development plan provides a compelling basis upon which to build our reform agenda. let us begin to do the work. the contribution of the south african reserve bank to the national development plan is captured in the constitution of the republic of sa and i would like to end by quoting “ section 224. the primary object of the south african reserve bank is to protect the value of the currency in the interest of balanced and sustainable economic growth in the republic. ” thank you. bis central bankers ’ speeches

!! in fact, such basic motivation underlying the fccb - based funding strategy is completely antithetical to both corporate finance theory and international practice and turns the entire rationale of such funding strategy on its head! this is because the very raison d ’ etre of fccb funding option is to lower borrowing costs below that of an otherwise comparable plain - vanilla non - convertible foreign currency bond. the short point is that the fccb borrower is baiting the overseas investor with an equity option kicker / appetizer, embedded in an otherwise comparable plain - vanilla non - convertible bond. effectively, in this structure, overseas investor in fccb purchases an embedded option and pays an option premium in the form of lower coupon on fccb. i hardly need belabor the point that equity is always more expensive than debt capital of whatever kind, including even junk / high - yield bonds! so i would urge business and industry to fully provide domestic rupee / foreign currency resources to meet potential liability under fccbs, rather than hope that fccbs will be converted which, in fact, if anything, can be the case of overseas investors, but certainly not, of issuers of fccbs! 8. although as serious as foreign exchange risk, interest rate risk has not compelled as much attention in the indian debt market space. if only to have a sense of how significant, and serious, it can be, i invite your attention to what i said about the key policy rates rising cumulatively by 5. 25 % since march 2010 to date! just like unhedged foreign currency exposure, long - term floating rate loans represent a source of significant risk not only to businesses themselves, but equally to financing banks as they transfer interest rate risk from lenders to borrowers, effectively substituting interest rate risk of lenders with potential credit risk in terms of creating potential non - performing loans! at another level, as fixed rate loan has more certainty, and hence less risk, both for borrower and lender, it should be preferred both by borrowers and lenders alike. thus, for interest rate risk management, the base - case, risk - neutral strategy, is invariably fixed rate long - term funding by corporates. contextually, the current popular refrain in the policy debate is that absence of a competitive, liquid, deep and efficient corporate bond market has been the undoing of infrastructure financing which typically involves long - term fixed rate funding. and as to why banks cannot make long - term