such as direct purchases into buy & hold or trading portfolios. on the other hand, participation in t - bonds through deposits and / or swaps with local banks is less welcome, because a substantial part of the market, credit or fx risk remains with the local banking sector. an example of a least favored involvement is a deposit with a local bank combined with a stop - loss that keeps all the risks in the domestic financial system. such involvements we would like to discourage. as regards practical policy consequences, we believe that what is good for the stability of the economy is also good for the market participants individually in the long term. we therefore prefer corrective self - regulation to regulatory action. we understand that it may be difficult for individual players to internalize all consequences for the entire financial system, but we are here to provide enough guidance through speeches and regular discussions. that being said, we stand ready to act swiftly, should we see that the imbalances from unequal risk sharing accumulate in a way dangerous to the financial system. we have enough tools for that purpose, including punitive reserve requirement and remuneration policies, as well as prudential measures aimed at liquidity, capital or open positions. in summarizing, by no means we would like to see lower volumes of capital inflows. we would only prefer to see a different structure than in the past. structure, in which foreign investors adequately share the risks involved in investing into the local economy. this does not imply only foreign direct investments and joint ventures – we also encourage pure financial flows as long as the credit, maturity and fx risks are not left entirely with the domestic financial system. the upcoming dinar t - bonds issues are going to be a good occasion for a renewed foreign investors ’ interest in the local financial market. we are hoping to see more trading, larger volumes, more market development, and more risk taking. it will also be a good occasion to test how the financial market players understand our preferences about risk needed for the balance of our financial system.

mankind, this is a giant one for bank regulators. it is also, inevitably, something of a step into the unknown. what will be the impact of changes to the ccb on credit and growth? will the two arms of policy ( monetary and macroprudential ) be better than one? and, if so, what institutional arrangements best deliver those benefits? policy experience from the recent past and the present can shed light on these questions. the us dotcom bubble as a first case study, consider the behaviour of the us economy after the bursting of the dotcom bubble in 2001. chart 2 plots us official interest rates in the period just before and after this event. interest rates fell sharply, from 6. 5 % at the beginning of 2001 to 1 % by the middle of 2003, to cushion the effects of the financial headwinds created by the dotcom bubble popping. consider now what interest rate path would have been predicted had policy been responding mechanically to deviations of inflation from target and output from potential – in other words, following a standard “ taylor rule ” [ taylor, 1993 ]. as chart 2 shows, this would have implied a less dramatic fall in interest rates in the us. after the dotcom crash, a gap opened up between actual and taylor - rule implied us interest rates. this was both sizable ( on average, one or two percentage points ) and persistent ( lasting from early 2001 right up until summer 2008 ). over that period, the taylor rule suggested us monetary policy was looser than could be explained by inflation and output alone. whether by coincidence or causality, what happened next in us credit markets was dramatic. chart 3 plots the ratio of us credit - to - gdp, relative to its long run trend, over the same period – the “ credit gap ”. this indicator has a special significance from a regulatory perspective because it will act as a guideline path for the setting of the ccb once basel iii comes into effect. the us credit gap rose steadily from around 2001 up until 2008. relative to its long - run trend, credit - to - gdp reached a peak of over 10 percentage points. by historical standards, this is a huge credit boom. we can now ask ourselves the counter - factual question, how different might the world have looked had macro - prudential policy been available to assist monetary policy? answering this question rigorously would require that we re - run the paths of policy, the economy and the financial system over this period –