, many questions still require answering from policymakers and society in general. how do we prevent the emergence of another severe recession? how do we as african countries learn the lessons from this recession? one thing for certain is that there have been significant outflows of capital to the developed countries. many banking facilities have been undermined. again this poses the question about what the structural ownership of banks in our economies should be in the future. although we all rejoice when one or the other bank in our economies is owned by non - resident shareholders, the question arises as to the sustainability of such a model? let me not be misunderstood : we need foreign direct investment in the same way as we want our own banks and other companies to invest abroad. this is a globalised world and cross border investment flows are part of that. but still, the questions remain. these and other questions would have been asked by kgosi edward patrick lebone molotlegi. a finite resource this area, like the rest of the region, depends heavily on mining the platinum group of metals as a major economic activity. we all know that all minerals are a finite resource – there are limited reserves and we, therefore, have to ensure that we bequeath wealth unto the future generations of bafokeng. if anything, the global slowdown experienced earlier in the demand for metals, indicates that we, like the leadership here has noticed, cannot depend solely on these resources. this point is best illustrated by the fact that south africa was once a global leader in gold mining and gold constituted well over fifty percent of south african exports, well that is no longer the case. south africa has been overtaken by china as the world ’ s number one gold producer. this is largely due to gold reserves in this country being depleted and what little is left getting more and more difficult to extract as mining becomes a deeper and deeper activity and, therefore, too costly and a high risk effort. it is today a misnomer to speak of johannesburg as the city of gold as there is no more gold mining in the city other than the reprocessing of those mine dumps. gauteng and egoli only bring fond memories of goldmining in and around johannesburg. the challenge that we face, and i know it is being confronted head - on here, is that one day our mineral resources will be depleted and we have to depend on other economic activities. south africa's diamond coast illustrates the point further

these two questions are closely interlinked and quite justified. we have to learn from the past in order to shape the future of our financial system. so this morning, i want to speak about two things : • first, i will briefly outline my understanding of the causes behind the events which unfolded on january 30, 2009 and what the clico / cib crisis has taught us ; and • then, i will discuss five major initiatives the central bank has been undertaking to avoid another crisis. these initiatives will not just protect our financial system, but also help shape its future direction. learning from the past – what the clico / cib crisis taught us ladies and gentlemen, at the outset i wish to indicate that the cl financial failure is the subject of three major investigations. first, the central bank commissioned a forensic investigation which resulted in the filing of a civil suit claiming damages against former bis central bankers ’ speeches leading cl financial executives and their related companies. second, the director of public prosecutions is investigating the prospect of laying criminal charges against these former leading executives. third, a commission of enquiry has completed its deliberations and is expected to produce a report into the circumstances behind the failure of cl financial. as you may appreciate, these investigations quite naturally constrain my public disclosures on the causes of the clico / cib crisis. i will therefore, confine my discussion to the public statements made by central bank officials at the commission of enquiry. my reading of those public statements suggests that the following could be interpreted as some of the reasons behind the failure of the cl financial group : • cl financial reflected a highly complex and opaque business model. poor corporate governance and weak risk management practices made it difficult to assess the extent of exposures and potential spillovers. it was difficult to determine who was dancing with whom, and how closely. this opacity magnified the shock to confidence as the clico / cib crisis unfolded ; • the cl financial group became highly over leveraged and heavily interconnected. both clico and cib used aggressively high interest rates to finance equally high risk investments, much of which were in illiquid assets including real estate ; • actual leverage of the cl financial group was even greater than immediately apparent. distorted incentive structures encouraged excessive related - party transactions, which were not specifically prohibited in regulation, but which carried significant contagion risks ; • liquidity risk was higher than recognized. clico and cib took on excessive maturity