became increasingly evident is the continued vulnerability of our markets to the arbitrary and unpredictable devices of the offshore markets. adverse conditions brought on by the ndf market activities in the offshore market, in particular the ringgit non - deliverable forward ( ndf ) market, had brought on observable adverse impacts to the onshore market. to our disappointment, onshore players had become followers rather than leaders in determining domestic market rates. consequently, taking the lead from the ndf market, the ringgit exchange rate has been quite volatile since last year, peaking at 23. 1 % for its 1 - month historical volatility and is the highest among regional currencies for this year. of late, it has been trending down, but the average volatility remains high at 10. 1 % compared to its 5 - year average of 8. 2 %. on a day - to - day basis, the ringgit was also volatile, particularly prior to the usd / myr fixing time even though it can be quiet throughout the rest of the day. as trade related fx transactions are done throughout the day, it is highly perplexing as to why trading activities and observed volatility have to be concentrated just prior to the fixing time. the only plausible reason for the above phenomena is that it emanates from the fixing orders from non - resident financial institutions 1 / 5 bis central bankers'speeches ( nrfi ), the transactions of which are driven by ndf market activities. as ndf is settled using fixing rate, nrfi have been using fixing orders to square their offshore ndf positions. as a consequence of such speculative activities, the ringgit fixing rate has significantly diverged from the onshore traded ringgit prices. the ringgit fixing rate was clearly out of sync with real trades and investment activities done throughout the day. the impact of ndf market volatility has been clearly pervasive in the onshore market. several fx traders in the domestic market were observed to be looking towards the ndf market to provide cues in determining the opening market price for ringgit. and this behaviour continues throughout the day in the pricing of the ringgit. unfortunately, our media and public were also drawn into taking the lead from these offshore rates as well. the sum effect of these behaviours is that we inadvertently imported the ndf volatility into the onshore market. given the importance of this, let me dwell a little further on the dynamics of the situation. the

##nb. nl, which is open around the clock. how the regulator contributes to sustainability having explained the importance of durability for the dutch pension system, i would now like to take a closer look at the role of the regulator. by exercising supervision, the nederlandsche bank contributes to durable old age pensions and a strong pension industry. supervision contributes to three principles which are related to the themes mentioned earlier, i. e. discipline, transparency and a sound pension industry. these principles are : ( 1 ) identifying risks, ( 2 ) preventing rising deficits, but should these occur, ( 3 ) applying a customised approach to the resolution of the problems, effected as soon as possible. these principles form the foundations of the financial assessment framework. the framework does not prescribe the substance of pension arrangements ; that is the province of the social partners. furthermore, as regulator, the nederlandsche bank is not responsible for the quality of pension arrangements. incidentally, this does not mean that the bank does not have an opinion on what constitutes quality. in my capacity as economic advisor, i have pointed out on several occasions that pension arrangements should include a serious indexation ambition. nominal guarantees are nice, but protection of purchasing power is nicer still. a serious indexation ambition must therefore be at least in line with the ecb ’ s objective of price stability, i. e. around, but not more than 2 % inflation annually. the financial assessment framework contains standards for overseeing compliance with the pension contract. basically, financial supervision addresses the question whether a pension fund ’ s assets are proportionate to its liabilities and prevailing risks. in other words, it seeks to prevent under - funding. this is the foundation of the funding system ; in combination with adequate buffers, cost - effective contributions and sufficiently inflation - proof pensions, it makes for a durable pension system. but even in a sound, durable pension system, under - funding can never be ruled out altogether or only at a very high cost. should an unhoped - for financial disaster take place, a customised plan, which takes into account the fund ’ s efforts to prevent under - funding, and ensures that the interests of the participants are best served will take effect. such a customised plan is set in motion only if the pension fund ’ s management has deployed its instruments to the full, and the employer or the industry involved, have done their utmost. it is important that the problems be solved as fast as is