did not see inflation coming and they did not understand it when it did. in emerging markets, we have taken some satisfaction in the verdict of many in the policy community4 that some of us did better here than the developed countries. but the big central banks are high - quality organisations and they demonstrate that quality, not by avoiding mistakes but by dealing with them and being honest about their errors. in the 1970s ‒ the last big global inflation surge ‒ central banks made many mistakes, gave many excuses and lost control of inflation. in the 2020s, i am confident we will do better, with far fewer excuses and much more success. 5 we are going to deliver on our mandates. of course, i am not a municipal manager. i doubt that my challenges, and the challenges of my profession, map directly to your challenges. that said, there is one area where our work overlaps, and that is the issue of inflation. at the sarb, our fundamental mission is to protect the buying power of the rand, and we specifically aim to protect it from increases in the cost of living, as measured by the consumer price index from stats sa. if you go to that index, you see some significant components where prices are set at the municipal level. think of water, think of rubbish collection, think of municipal rates. this discussion draws on amy edmondson. right kind of wrong : the science of failing well. 2023 an example is https : / / www. piie. com / publications / working - papers / central - banks - and - policy - communicationhow - emerging - markets - have https : / / www. federalreserve. gov / newsevents / speech / powell20220826a. htm unfortunately, these prices are often rising by more than headline inflation. in the latest inflation report from stats sa, for example, water inflation was 9. 6 %. housing assessment or municipal rates was 8. 4 %. these numbers should be much closer to the midpoint of the sarb ’ s target of 4. 5 %. high municipal inflation eats away the incomes of our people, keeps our inflation rate elevated, and makes it harder for us to lower interest rates. it ’ s ok for prices to keep up with inflation ; it ’ s not ok for some prices to always be rising by more than inflation. and we need you to take the lead to tackle this. let me conclude by summarising the main points i have made

- makers and by the financial industry, aimed at restoring confidence and addressing the weaknesses that have been revealed by the market turmoil should contribute to strengthening the resilience of the financial system. i would like to stress particularly the importance of the new basel ii capital accord, which is to be fully implemented by january 2008. indeed, the new accord strongly relies on significantly improved risk management in determining the appropriate level of capital buffers for banks. nevertheless, and despite these improvements, the degree of sophistication of financial markets also calls for constant investment in stress - testing methods and practices in order to ensure that banks have full understanding of the potential losses they might incur in highly unlikely but plausible scenarios and that they are adequately prepared to address the associated risks.