and macroeconomic stability. i believe that the benefits from this interplay are best realized when the supervisory functions are integrated and placed in one umbrella organization such as the central bank the most logical location, bearing in mind the synergies that i mentioned. in other words, in the jamaican context, my preference is for an integrated and autonomous supervisory authority within the central bank. traditionally, the central bank ’ s main objective is the achievement of monetary and financial stability as a means to enhancing macroeconomic stability, growth and development. financial stability has always therefore been an important aspect of central banking. in pursuit of its twin functions, the central bank closely monitors developments in the financial market, interacts regularly with its primary dealers and other market players and analyzes the risks to the financial system. over the last ten years the central bank ’ s emphasis on financial stability has increased because of the increased potential for systemic risk. the transformation in the structure of financial markets and the continuing increase in volumes and products, have contributed to increasing the potential for risk and fuelled the need for a greater degree of interdependence in the pursuit of macroeconomic and financial stability. we have seen the challenges that recent developments in financial markets have posed for central banks both here and abroad. indeed, these developments point to the dynamic and intricate links between central banks and financial markets. the northern rock case certainly reinforces the importance of these links and points to the need for a more integrated approach to the analysis and management of financial market activities both from a central banking and supervisory point of view. this is especially important in an environment of continuing change and particularly relevant to emerging and vulnerable market economies such as jamaica. there is no doubt that the achievement of a strong and resilient financial system is enhanced by the continuous improvement in the analysis and management of risk. indeed, that is the subject of the basel ii framework. but the achievement of a strong and resilient financial system is also augmented by sound and sustainable monetary and fiscal policies. the linkages are therefore critical. furthermore, and speaking from the perspective of the bank of jamaica, the ability to act effectively in a financial crisis is enhanced by the fact that the supervision of commercial banks resides in the central bank. indeed, the bank ’ s current supervisory function helps the central bank to obtain timely and reliable information regarding conditions in the banking sector and the payments system. but over the years the changing financial landscape has spawned a variety of institutions other than the traditional commercial banks. the bank

of jamaica has no regulatory authority over these other institutions, which makes it difficult to quickly gather and evaluate the necessary information to facilitate sound policy responses or avert crises. i believe that our central banking activities, coupled with the access to information from an integrated supervisory authority under the umbrella of the bank of jamaica, would enhance the effectiveness of the central bank ’ s ability to manage crises. at the same time the supervision of the financial sector as a whole would benefit from the results of central banking activities in the financial markets. the bank ’ s technical expertise in monitoring financial market developments would also be on hand to add value to prudential risk evaluation. the bank of jamaica is very pleased that the government has indicated its commitment to an independent central bank. we will be working towards this and in this context we will pursue the matter of an umbrella supervisory authority under the central bank. there are good reasons to believe that such an arrangement would significantly benefit the financial system as a whole. after all, price stability and financial stability go hand in hand, and prudence is as intrinsic to central banking as it is to financial stability and supervision. ladies and gentlemen, i believe that the tenth annual asba assembly will serve to strengthen the bonds of banking supervisors within the respective regions and provide meaningful insights into approaches to current issues in banking supervision. i know that your discussions over the next two days will produce valuable results and provide the direction for an even more robust administrative year for asba. thank you.