active role in developing the secondary bond market in the 1990s as the sole market maker, and played a leading role in bond derivatives, inter alia to ensure continued net selling of government bonds in adverse market conditions. in the late 1990s, the bank reduced its involvement in the secondary market, which at the time was judged to be sufficiently mature. capital markets of course also play an important role in policy making, providing instantaneous feedback to policy makers on market expectations and perceptions of policy. such perceptions and expectations are reflected in bond and equity risk premia. having noted the benefits of well - developed financial systems, my remarks would be incomplete without at least briefly referring to the global financial crisis and how this may have changed the views of some on the positive impact of financial development and the role of markets. john lipsky, former imf first managing director, put it very well when he said that “ … much of this reassessment is natural and sensible. however, it is fair to say that the idea that financial markets are not perfectly self - regulating does not represent a novel insight. to the contrary, there are good reasons why they are regulated universally. ” in a nutshell, this highlights the importance of regulation and effective supervision in order to try and avoid a repeat of the global financial crises, which led to an economic and sovereign debt crisis, which after 6 years the world economy is still struggling to recover from. however, it is also important that regulation is appropriately calibrated, and that a defensible balance is struck between ensuring maximum benefit from capital markets through innovation on the one hand, and the need to protect markets bis central bankers ’ speeches and financial systems that may be still be in their infancy or not yet sufficiently developed on the other. particular care needs to be taken when formulating global regulatory standards that do not appropriately take account of country - specific circumstances and may have unintended consequences. let me now conclude by congratulating you on this important initiative, which will contribute to the further development of efficient and well - functioning capital markets in both countries, and also promote regular interaction between issuers, investors, brokers and others in the interest of growth and development. i wish you every success in your endeavours, and no doubt you will go from strength to strength in years to come. i thank you. bis central bankers ’ speeches

daniel mminele : the importance of well - developed and functioning capital markets for growth and development address by mr daniel mminele, deputy governor of the south african reserve bank, at the opening ceremony of the 1st south africa - china capital market forum conference, johannesburg, 7 august 2013. * 1. * * introduction good evening ladies and gentlemen. allow me to extend a special welcome to our visitors from china. thank you to the johannesburg stock exchange, shanghai stock exchange and frontier advisory for inviting me to speak at this inaugural conference of the south africa - china capital market forum. this initiative bears testimony to the growing relationship between china and south africa. in the 15 years since the establishment of official relations between china and south africa, cooperation between the two countries has improved immensely. a number of memoranda of understanding ( “ mous ” ) have been signed, foreign direct investment ( fdi ) has picked up, and bilateral trade between the two countries has surged. china became south africa ’ s biggest trading partner in 2009 and is now the largest destination for south africa ’ s exports. with respect to fdi, china is actively involved in mining, manufacturing and construction with china ’ s fdi presence growing from around r340 million in 2005 to roughly r50 billion in 2012. the most notable fdi transaction was in the banking sector, specifically, the 20 per cent stake that industrial and commercial bank of china acquired in standard bank for us $ 5. 5 billion in 2007. south africa and china also cooperate in various international groupings, including the g20 and more recently as part of brics. south africa, as you know, was invited to join the brics group when china was the chair and successfully hosted the 5th brics summit earlier this year when it assumed chair of brics for 2013. having been already allotted an investment quota, at this summit, the south african reserve bank ( the bank ) and people's bank of china ( pboc ) signed an agency agreement enabling the bank to invest in china ’ s interbank bond market through the people ’ s bank of china. south africa was the first country on the continent to be given access to the chinese onshore bond market in this way. as part of the growing importance of trade between our countries, this represents an opportunity to diversify the country ’ s foreign exchange reserves accordingly, and to invest in the world ’ s fifth largest bond market which continues to grow rapidly, both in depth and liquidity.