##c ministers for finance and investment agreed to recognise cosse as a private sector association at their meeting held on 18 july 1997 in south africa. in terms of the aims of cosse, the nsx and the jse play an important role in the institutional structures of stock exchanges in sadc. among others, cosse has set itself the challenging goal of establishing by 2008 an integrated real - time network of the national securities markets within sadc, thus facilitating progress with the process of financial integration within the sadc region. this will pave the way towards cross - border listings and, therefore, trading and investments among the different member exchanges of sadc. however, like all successful developments in market infrastructure, this should also be driven by market participants, who will seek the optimum balance between cost and risk. recent monetary policy developments in south africa as i indicated earlier, the existence of the cma implies that south africa effectively determines monetary policy for the whole cma. cpix inflation has been within the inflation target range since september 2003 and averaged 4, 3 per cent and 3, 9 per cent in 2004 and 2005 respectively. since march of this year, cpix inflation has been steadily rising, mainly as a result of rising energy and food prices, and in august inflation increased at a year - on - year rate of 5 per cent. buoyant consumer demand, which increased at an annualised rate of 8 per cent in the second quarter of this year, has been posing a further risk to the inflation outlook. this demand has been fuelled by credit extension growth in excess of 25 per cent. these developments contributed to the expanding current account deficit which measured in excess of 6 cent of gdp in each of the first two quarters of this year. this is turn has contributed to the recent weakness in the rand, which has depreciated on a trade weighted basis by approximately 23 per cent since early may. this degree of depreciation, in turn, poses a further risk to the inflation outlook. in response to these developments, the monetary policy committee of the south african reserve bank has raised the repo rate by 50 basis points at each of the past two meetings of the monetary policy committee. this change in the monetary policy stance has occurred against the backdrop of a strongly growing domestic economy. south africa's economic growth averaged 4, 5 per cent and 4, 9 per cent in 2004 and 2005 respectively. despite the change in the monetary policy stance, we do not anticipate

to approximately 98 per cent whilst south africa has, in effect, retained the bulk of the excise component – which typically amounts to about 50 per cent of the total ; the balance has then been transferred to the other sacu member states, constituting a charge on the services account of south africa ’ s balance of payments ; an income in the services account of the balance of payments accounts of the other sacu member states. with imports rising rapidly in recent years, import duties collected have also been buoyant and the total amount paid over to the governments of lesotho, namibia and swaziland has risen threefold over the past five years. within sadc, recent developments have been guided by the memorandum of agreement ( mou ) on macro - economic convergence, signed in august 2002 on the one hand ; and the regional indicative strategy development plan ( risdp ), on the other. the mou identifies the following indicators as convergence criteria and proposes the timetable indicated in table 4 for their achievement, whilst table 5 adumbrates the timetable for achievement of the quantitative targets for the so - called secondary macro - economic indicators. stated in words, the sadc convergence criteria require member states to achieve the following by 2018 : an inflation rate of less than 3 per cent per annum ; a budget - deficit - togdp ratio of less than 3 per cent ; a ratio of public - sector debt to gdp of less than 60 per cent and a ratio of the deficit on the current account of the balance of payments to gdp of less than 5 per cent. table 5 can be interpreted in similar fashion, mutatis mutandis. the desire for a stable macro - economic environment is one to which most policy - makers would assent. clearly, though, there will be a need to re - assess the quantitative dimensions of the desired end - state if severe macro - economic dislocation is to be avoided in the period which is to extend beyond 2012, in terms of the sadc timetable. conclusion to conclude : 1. south africa has a well regulated banking system, well capitalised, compliant with basel ii and largely unaffected by contagion arising from the financial market turmoil which started in the sub - prime market of the united states of america last year. 2. the relevant south african authorities maintain vigilance with regard to further development of the banking and financial system. evidence of this is to be found in recent regulatory pronouncements, in particular changes to the regulations under the