yuba raj khatiwada : seacen – enhancing collaboration with other global financial stakeholders response address by dr yuba raj khatiwada, governor of the central bank of nepal and chairman of the seacen board of governors, at the 50th seacen governors ’ conference, port moresby, papua new guinea, 20 november 2014. * * * mr. patrick pruaitch, cmg mp, minister for treasury, papua new guinea mr. loi bakani, governor of bank of papua new guinea mr. naoyuki shinohara, deputy managing director of international monetary fund my fellow governors and heads of delegates delegates and distinguished speakers ladies and gentlemen it is my great pleasure to be here and address the 50th seacen governors ’ conference. as the chairperson of the bog, let me extend warm regards to every one of you. i would also like to extend my sincere gratitude to mr. loi bakani, governor of bank of papua new guinea for hosting this important seacen event. i take this opportunity to express my sincere appreciation to mr. bakani and his entire team as well as the seacen centre for the warm hospitality extended to the delegates and also for the excellent arrangements made for this event. the colorful reception we had last evening will be highly memorable to all of us. ladies and gentlemen, while addressing this august gathering at the opening ceremony amid 20 member central bank governors and quite a few associate members, i am reminded of the first seacen governors ’ conference which was held in 1966 in bangkok with the participation of seven heads / representatives of the central banks. since then, and with each governor ’ s conference, the participation has grown from the small group to this present member of twenty, reflecting the organization ’ s vibrant and dynamic growth. today, i am happy to welcome officially the hong kong monetary authority as the newest member of the seacen. fellow governors, each governor ’ s conference is based on a topical theme which is discussed by participating heads / representatives and where important issues are raised, and these discussions have contributed and enriched the policy debate in this region. i am happy to observe that this trend is continuing with this bi - centennial governors ’ conference on “ regional initiatives in the midst of vulnerabilities ”. ladies and gentlemen, the theme for this year ’ s seacen governors ’ conference is indeed timely. the theme acknowledges that in the integrated global economy the strategies of central banks are affected by the external economy where formulation of domestic

upwards over recent months. this is a matter of concern. today ’ s increase in ecb interest rates is a decisive step to address these upside risks to price stability and it will contribute to the continuation of non - inflationary growth in the euro area. allow me to give you a more detailed overview of the main elements of our assessment of monetary, financial market and other economic developments. let me start by addressing the latest monetary developments in the euro area. the three - month average of the annual growth rates of m3, covering the period from february to april 2000, was 6. 3 %, ie significantly above the reference value of 4½ %. thus, the most recent m3 data confirm that the liquidity situation in the euro area continues to be very generous. m3 growth deviated from the reference value in 1999 and growth rates increased further in early 2000. this picture of very generous liquidity conditions in the euro area is complemented by the rapid expansion of credit to the private sector, which remained close to or above 10 % throughout 1999 and exceeded 11 % in april 2000. taken together, such developments would clearly point to upside risks to price stability over the medium term, if not counteracted in time. turning to the second pillar, we have to consider economic and financial market developments as well as consumer price developments. looking at economic developments, the outlook for growth in the euro area has improved markedly over the past few months. overall, indicators for economic activity released since the end of last year point to continued strong growth, following the upturn in real gdp growth in the second half of 1999. all the forecasts currently available from major international organisations and private institutions now project real gdp growth to be above 3 % this year and next year, which is significantly higher than expected at the end of last year. this positive outlook reflects favourable domestic and external conditions for growth. on the domestic side, expansion of private consumption and investment should benefit, in particular, from ongoing employment growth and higher rates of capacity utilisation. domestic demand is also supported by high business and consumer confidence. on the external side, the upturn of growth in the world economy appears to be stronger, faster and more broadly based than was expected at the end of last year. hence, euro area exports should remain strong. financial market developments also support the view that the economic expansion in the euro area is set to continue at a fast pace. moreover, the exchange rate of the euro appreciated at the end of may and in