, the impetus provided by the world cup has resulted in a revolution in municipal planning for public transport and forward thinking about urban development. 5. the world cup and monetary policy where does monetary policy fit in to all of this? of course, when the world cup finals begin in 2010 we will be keen spectators and supporters of bafana bafana, but there is not much we can do to directly impact on the fortunes of the team. i will leave that in the capable hands of mr carlos parreira and his team. we have to keep our eyes on a different ball and a different goal. through this exciting growth phase that we are experiencing, monetary policy has to ensure that inflation is kept under control. in other words we have to ensure that we maintain inflation within the 3 - 6 per cent target for cpix. excessively high growth brings with it potential inflationary pressures which monetary policy has to be sensitive to. in economic parlance, this refers to the output gap, which is the difference between the potential non - inflationary output of the economy and actual output. from a monetary policy perspective, we have to determine whether the growth we are experiencing is purely cyclical. if this is the case, we are likely to experience inflationary pressures which would require a reaction on our part. however if the current growth trend is structural, that is, if it reflects an increase in the potential output of the economy then these developments are not necessarily inflationary and are sustainable. unfortunately, estimating potential output is not a simple task and estimates are subject to a high degree of uncertainty. our view is that in the light of the enormous structural changes and productivity growth in the economy, much of the higher growth we have experienced in recent years is of a structural nature. current research in the bank estimates that the potential output of the economy is now at least around 4, 5 per cent or more. this can be compared to estimates of around 3 per cent or less during the 1990s. we appear to be well on the way to achieving the 6 per cent sustainable growth that asgisa is targeting, and the spin - offs from events such as the fifa games will go a long way towards ensuring that this is a sustainable story. at the same time, monetary policy will have to remain vigilant to ensure that growth occurs in a stable macroeconomic environment of price stability. 6. growth and the current account of the balance of payments one of the consequences of high growth and investment has been

with taxpayers. the rescue of significant parts of the global financial system from nearcertain collapse by public authorities came at very substantial risk and costs to taxpayers. according to data collected by the bank for international settlements, here in the united states, for example, the total potential costs of various support measures taken – capital injections, asset purchases, and guarantees of bank debt – amount to about 40 per cent of gdp. for some european countries, these numbers are even higher. while in some cases governments and central banks have been able to reduce their exposures, sometimes even with a profit, the involvement of the public sector remains important. the ultimate outcomes of these involvements are uncertain. moreover, the consequences of the crisis in terms of job ben s. bernanke gave a thorough overview of the various measures taken worldwide in his speech “ reflections on a year of crisis ” at the federal reserve bank of kansas city ’ s annual economic symposium, jackson hole, on 21 august 2009. and wealth losses, huge increases in discretionary and non - discretionary public spending, and dramatic declines in public revenue is bound to be enormous. in some countries, public debt is set to rise at a pace never seen before in peace time. at the end, the citizens of our respective countries will have to foot the bill, one way or another. the second reason is that the crisis also generates important intangible costs which are often overlooked. confidence in the financial sector and those running it has been severely damaged. moreover, because a small number of individuals have dogmatically equated markets with the unbounded pursuit of short - term profits, faith in the benefits of a marketbased economic system has been undermined. finally, the extraordinary public policy response to the crisis has potentially prepared the ground for even more moral hazard in the future. the third reason is that this financial crisis will not be the last one. between 1973 and 1997 alone, there were 139 documented financial crises in various parts of the world. 2 some suggest that we should redesign the global financial system in such a way that there will never be a financial crisis again. this is neither desirable nor realistic. as long as we want a financial system that performs a meaningful and useful function for the real economy, we will have to live with financial cycles. moreover, the current crisis has clearly demonstrated the limitations of complex regulations and models. even the most complex models will never be infallible. what we can and should do is to limit