the market. third, the end - of - day lending rate on the standing facility was reduced from repo plus 100 basis points to the repo rate. at the same time, the borrowing rate on the standing facility, which is the rate at which the sarb absorbs liquidity, was also adjusted lower. commercial banks ’ deposits at the sarb now earn interest based on the repo rate less 200 basis points, compared to the repo rate less 100 basis points previously. this measure is meant to discourage banks from depositing money at the sarb, and to encourage money market liquidity. lastly, as an extra measure to add liquidity and promote the functioning of the bond market, the sarb commenced with a programme of purchasing government securities in the secondary market. more than r30 billion worth of government bonds has been bought since the commencement of the programme in march this year. regulatory and supervisory relief measures since the 2008 / 2009 global financial crisis, south africa has implemented reforms to strengthen its regulatory framework for financial institutions and improve the resilience of the financial system. this has enabled the prudential authority ( pa ) to deliver temporary regulatory relief for banks in a manner that is consistent with internationally agreed regulatory standards. the pa has provided guidance covering accounting matters and imposed a limit to the payment of dividends and bonuses by banks and insurers to ensure the conservation of capital and retained capacity in an environment of heightened uncertainty caused by covid - 19. page - 5 - of 9 expected impact of the south african reserve bank ’ s response the sarb ’ s policy responses are an important element of providing support to the economy. interest rate decisions are expected to play an important role in replacing displaced income. the relaxation of certain regulatory measures has enabled banks to provide support to households and businesses through continued lending activities, alongside the government loan guarantee scheme. in addition, the liquidity operations have supported market functioning, which is important for financial stability. while there is limited information to assess the impact of interest rate adjustments and other regulatory measures, the decline in indicators of bond market frictions and the improvements in money market liquidity conditions testify to the positive impact of the sarb ’ s liquidity management measures. financial stability the sarb has a statutory mandate to protect and enhance financial stability in south africa by monitoring global and domestic conditions, using various indicators to identify the risks and vulnerabilities which may impact on the financial system. during the past year, the main risks to financial

for crisis prevention while economic and financial conditions are still fragile. as a typical and familiar example of such difficulties, i would like to raise a couple of points concerning the volcker rule stipulated in the dodd - frank act. first of all, i should make it clear that i fully agree with the fundamental reasoning behind the volcker rule. indeed, speculative activities by some financial institutions under the “ originate - to - distribute ” type business model were the main driver of the recent crisis, as explained before. based on such appropriate recognition, the dodd - frank act asks financial industries to make a thorough assessment of their business models, and to modify them if necessary. at the same time, in view of the on - going eurozone crisis, i would like to emphasize that policymakers should be extremely careful to avoid any unintended consequences when introducing new rules, especially in terms of possible negative impacts on overseas sovereign debt markets at this juncture. moreover, central banks are required to be attentive to the liquidity of sovereign debt markets, which are the core of the monetary policy transmission mechanism. the volcker rule is intended to restrict proprietary trading by banking entities for the purpose of short - term gain. however, the rule could have significant implications for important market - making activities as well as for market liquidity, depending on how related regulations are written and how they are actually implemented. according to the proposed regulations, u. s. government bonds and most other u. s. agency obligations are exempt from the rule. obviously, the u. s. authorities are keen to ensure smooth transactions for these securities, and are well aware of the importance of market - making activities for that purpose. market liquidity is no less important for the securities of non - u. s. governments. however, the proposed regulations do not exempt government obligations of other countries, including bis central bankers ’ speeches japan, canada and european countries. thus, if the volcker rule were to be strictly implemented as proposed, it could adversely affect the liquidity of overseas sovereign debt markets. another issue is that short - term foreign exchange swaps could also be subject to the volcker rule under the proposed regulations. this means, dollar liquidity that has been provided through foreign exchange swaps could be curtailed, causing difficulties for the dollar funding of financial institutions. this could also be a concern for many financial institutions, especially when the global condition of foreign - currency funding is tightened. i understand that the proposed regulations take into