. while the enabling legislation for “ twin peaks ” is still in the process of being finalised, some of the support measures recently announced by the sarb for african bank were informed by the principles contained in the g20 / fsb key attributes for effective resolution regimes, which are expected to feature in the new legislation. allow me to make a brief comment about the measures announced by the sarb last sunday. the legal structure of curatorship will facilitate an orderly, structured, and fair approach to addressing the current challenges at african bank in an effort to secure a viable future on the basis of a transformed business model, while ensuring minimum disruption to our financial and credit markets. the proposed solutions were developed in a collaborative process between the public and private sector. the leadership and commitment shown by south african commercial banks and the pic in bis central bankers ’ speeches underwriting the capital raising for the envisaged “ good bank ” bears testimony to the strong underpinnings of our banking and financial system, the resilience of which will be enhanced by these measures. once the necessary legislation has been enacted, the current financial stability committee ( fsc ) of the bank, will be replaced by the financial stability oversight committee ( fsoc ). this committee will be chaired by the governor with the membership of this committee comprising the sarb, the financial services board ( fsb ) and national treasury as an observer. the primary mandate of the fsoc will be to monitor and assess systemic risks to financial stability and make recommendations on how to counter or eliminate these risks. in the execution of its financial stability mandate, the bank relies as far as possible on the efficient functioning of market forces to ensure the stability of the financial system. thus, the bank ’ s action will be guided by the principle of the containment of systemic risk. given the large representation from the insurance industry in the audience today, i would like to briefly outline some of the regulatory changes confronting the insurance industry. as you are aware, some four years ago, the fsb and the south african insurance industry embarked on the solvency assessment and management ( sam ) project. this project is directed at establishing a risk - based supervisory regime for the prudential regulation of both long - term and short - term insurers in south africa. in essence, the objective is to enhance the monitoring and management of risk so as to ensure that the capital requirements are appropriately aligned with the underlying risks of an insurer. under the twin peaks regulatory regime

emes may have to resort to less optimal policy options, which include implementing macro - prudential measures such as capital controls, and excessive reserve accumulation. the imf has also acknowledged that national policies alone may not be sufficient to address the adverse spillover effects in the global economy. 3 however, the nature and timing of such policy coordination is very much still an open question. this, in effect means that, while exogenous shocks are a distinct possibility, the nature and extent of these shocks are difficult to estimate and discern. international policy coordination, while clearly desirable, gets complicated by asynchronous monetary policies, which are informed by differing economic cycles. this is a challenge confronting monetary policy formulation and implementation in many emes currently, and is a reality we also face in south africa. 2. challenges and opportunities in south africa ’ s monetary policy environment as you are aware, the sarb ’ s monetary policy mandate is executed within a flexible inflation targeting framework. in essence, this implies that when inflation expectations are under control the sarb will tolerate temporary breaches of the upper target band of 6 per cent in the interests of containing short - term fluctuations in economic growth. the 0, 6 per cent contraction of the economy in the first quarter provided strong evidence of the impact of the protracted labour strike in the mining sector. while the end to the strike in the manufacturing sector which was announced at the end of july is to be welcomed, the impact of these strikes on the second quarter growth figures and over the longer - term are still to be ascertained. the recent quarterly labour force survey ( qlfs ) released by statistics south africa shows that the official unemployment rate has increased to 25, 5 per cent from the 25, 2 per cent registered for the first quarter of 2014. of particular concern is the decline of 24 000 formal sector jobs and the increase in the number of unemployed to 5, 2 million people which is the highest level since the inception of the qlfs in 2008. there is little doubt that job creation and reducing unemployment remains the single most important economic challenge confronting south african policy makers. imf, 2014. imf multilateral policy report : 2014 spillover report, imf, washington ( july 2014 ) bis central bankers ’ speeches the prospects for employment creation have also been adversely affected by the deterioration in the growth outlook. the bank ’ s most recent forecast, published at the time of our last mpc meeting, is that economic growth