the assumption of higher oil prices. in the view of the governing council, risks to this outlook for price developments remain on the upside. they include further increases in oil prices, a stronger pass - through of past oil price rises into consumer prices than currently anticipated, additional increases in administered prices and indirect taxes, and – more fundamentally – stronger than expected wage developments. against this background, it is crucial that the social partners continue to meet their responsibilities, also in the context of a more favourable environment for economic activity and employment. regarding prospects for inflation over medium to longer horizons, our assessment that upside risks to price stability prevail continues to be confirmed by the monetary analysis. the rates of monetary and credit expansion remain rapid, reflecting the still low level of interest rates in the euro area. in particular, loans to the private sector continue to grow at double - digit rates on an annual basis, with this rapid growth remaining broadly based across the household and corporate sectors. the moderation of annual m3 growth observed in the past two months – to 8. 5 % in june and 7. 8 % in july – may possibly reflect the impact of previous increases in interest rates. however, it also needs to be viewed against the high growth rate witnessed in may, which represented one of the highest annual rates of m3 growth seen since the introduction of the euro. more generally, recent monetary developments should be assessed with the appropriate medium - term perspective, and thus against the background of the persistent upward trend in the underlying rate of monetary expansion observed since mid - 2004. on this basis, liquidity in the euro area remains ample by all reasonable measures. continued strong monetary and credit growth in the context of already ample liquidity points to upside risks to price stability over the medium to longer term. monetary developments therefore require careful monitoring, especially against the background of improved economic conditions and strong property market developments in many parts of the euro area. to sum up, annual inflation rates are projected to remain elevated in 2006 and 2007, with risks to this outlook continuing to be clearly on the upside. given the ongoing dynamism of monetary and credit growth in an environment of already ample liquidity, a cross - check of the outcome of the economic analysis with that of the monetary analysis supports the assessment that upside risks to price stability prevail over the medium term. it is essential that inflation expectations remain firmly anchored at levels consistent with price stability. accordingly, strong vigilance is warranted in order to ensure that risks to price stability

initiative also enhances our role as a regional risk management centre. 9. in may last year, mas published a consultation paper on amendments to the code on collective investment scheme. among other things, there are proposals to introduce a number of measures to address counterparty risks. for instance, mas has proposed that managers may only enter into otc financial derivative transactions with counterparties subject to prudential supervision. if the financial derivative transaction is performed on an exchange where the clearing house performs a central counterparty role, the counterparty risk can be taken as zero. mas will be publishing its response to the consultation paper in due course. 10. singapore is also a key risk management hub for the commodities business. we are asia ’ s leading otc commodity derivatives trading hub, accounting for more than 50 % of asia ’ s volume. there is also a confluence of users and suppliers of commodities risk management solutions in singapore. apart from the critical mass of global commodities traders, many global banks have also based their asian commodities business in singapore. these banks provide sophisticated risk management and hedging services to the regional corporates. 11. let me now turn to how to enhance transparency. sound corporate governance is fundamental to a successful disclosure - based regime. the financial crisis has highlighted the importance of risk management oversight at the board level and sparked increased global discussions on the need for better corporate governance practices. in december last year, mas published its response to the consultation feedback on corporate governance regulations and guidelines. the enhanced rules and guidelines underscore the important role played by the board in overseeing the soundness of the financial institutions. 12. mas has also been promoting improvements in the disclosure and quality of information available to investors. since the third quarter of last year, financial institutions are required to provide product highlight sheets when offering investment products to retail investors. this will provide brief highlights, including an overview of product features and risks, and applies to products that are accompanied by prospectuses, including exchange traded funds, asset - backed securities and structured notes. since january 2010, real estate investment trusts ( reits ) have also been required to hold annual general meetings ( agms ). these mandatory agms provide an important channel for communication between reit managers and investors. this will also increase transparency and raise the accountability of reit managers to investors. bis central bankers ’ speeches 13. last but not least, we remain committed to building diversity in singapore ’ s financial markets. we will continue to provide a conducive business