##chanisation while the jobs created in the growing services sector may offer lower pay. furthermore, the returns that go to the developers and designers of technology now far exceed the returns to the people who assemble the products or even the people who extract the raw materials for the product. these distributional challenges arise in a global context. with a rising share of profits going to the design companies who are generally located in advanced economies, less of the value addition occurs in poorer countries. to put it differently, more of the value of the product accrues from the research, development, marketing, logistics and intelligence of the product than in any other part of the supply chain. the pace of technological change appears to be accelerating exponentially. the internet, mobile telephony, networked computing and more recently artificial intelligence have implications for the world of work and for our lives that are difficult to comprehend. joseph stiglitz in his 2010 book freefall, argues that the jobs lost in agriculture at the end of the 19th century contributed to lower aggregate demand, leading to the great depression. this catastrophe was only resolved through the rise of manufacturing, initially prompted by the demands arising from the outbreak of second world war. is the unemployment we are witnessing today a result of a great dislocation of workers from manufacturing to services, or a replacement of workers – both skilled and unskilled – by artificial intelligence, or are there new work opportunities that are yet to be identified that could absorb the growing army of unemployed across the globe? bis central bankers ’ speeches these trends pose complex questions for policymakers. should we protect certain sectors, and if so, how? does protecting certain sectors or firms weaken the ability of the economy to transform or to innovate? again referring to the growth commission report, the preferred approach is to protect people through sensible welfare safety nets and retraining opportunities rather than protecting specific jobs. it also brings back into focus the role of the public sector not only as provider of public goods such as education and research and development but also as employer in labour intensive services such as health care, transport, crime prevention and education. does this level of unemployment not require all of us to reconsider the role and responsibility of the state in filling the gaps in services to all citizens that the private sector is not adequately meeting? conclusion south africa and the world face difficult challenges in reviving economic growth and creating jobs. sensible counter - cyclical policies combined with longer term structural reforms aimed at promoting growth, employment

2004, so did the external fund management programme. in 2004, south africa ’ s gross reserves amounted to approximately us $ 8 billion and this had grown to us $ 50 billion by 2011. however, with the most recent review, which took place this year, we decided that the funds under external management would be reduced, primarily because the latest saa supported benchmarks and related portfolios that could largely be managed internally. currently, we are at an advanced stage of reviewing the custodial arrangements we have in place, including the type of model which we would like to follow going forward. the custodial review entails : • benchmarking services received from custodians against current world custodial service standards ; • reviewing the current ratings of custodians against minimum ratings standards ; • reviewing services required from custodians against the bank ’ s business requirements ; and • determining the capabilities of custodians to provide ancillary services such as accounting, performance attribution, settlements and risk measurement and reporting. prior to the custodial review, the bank embarked on a comprehensive systems renewal project in order to upgrade the bank ’ s it and risk management systems, so as to create a superior reserve and risk management operational platform. the two projects, the systems renewal and custodian review, of course have a direct bearing on each other. we hope to make final decisions for the systems renewal later this year and hopefully be in a position to start implementing whichever system is chosen by the end of the year or early in 2014. the decision regarding custodial arrangements we also hope to make early next year. 4. asset tapering and reserves management what will keep reserves managers up at night? no doubt an important issue for reserves managers going forward is that of asset purchase tapering and the timing of policy tightening after the asset purchasing programme has been completed. the implementation of asset purchases by the us federal reserve in a bid to dampen yields on the longer end of the yield curve resulted in significant increases in prices of us treasuries, and prices of other advanced economy and emerging market bonds. in such an environment, it was not too difficult for reserve managers to earn good returns as yields rallied substantially, albeit with a fair amount of volatility. but as they say, everything that goes up must come down. the mere expectation of tapering by the us federal reserve had a significant impact on markets, bis central bankers ’ speeches introducing significant volati