, there could again be unintended consequences that require careful consideration during implementation. in south africa the definition of shadow banking as currently stated would cover credit - extending institutions that address the financial needs of individuals and smes who are not adequately integrated into the traditional banking sector. some of these institutions play an important role in deepening our financial system and advancing financial inclusion. a careful balance therefore needs to be struck between creating an enabling environment on the one hand, and ensuring appropriate market conduct provisions, protection of consumers and guarding against irresponsible and exploitative lending practices on the other. fsb governance review : as part of the process to enhance trust and confidence in the financial system, the fsb has proposed a review of its governance structure to ensure a comprehensive approach to representation in the fsb across all levels. south africa recognises the value of having the widest possible participation when developing global solutions to regulation in a highly globalised financial system and supports the principle of equal and balanced representation. the development of global financial standards, principles and processes require coordination between central banks, prudential and market conduct regulators, as well as policy making institutions such as the ministries of finance. a representative member body, in which each participant is able to contribute effectively, will improve the fsb ’ s ability to develop standards and rules that are responsive to the needs of key stakeholders in the global regulatory community, and will lead to greater compliance with global financial standards. bis central bankers ’ speeches before i conclude, let me say that completing the four remaining core reforms is quite an ambitious agenda which if rushed through could result in compromises being made and create its own challenges in the future. the fact that the leading global regulators have not reached sufficient agreement to issue joint regulations is causing divergences and market fragmentation between them. it is also having a big impact on efficiency and financial stability and is increasing the business costs for both the providers and the users of financial services. south africa is suffering direct and indirect consequences from this situation. more impetus and direction to address the current situation of fragmentation and arbitrage and push for a higher level of coordination is required. in the past, we have stressed the importance of national discretion and flexibility and we should continue in this vein. however, the scope, substance and spirit of the global regulatory objective should still be met and demonstrated at all times. 6. conclusion in conclusion, the task of global regulatory reform is complicated by the fact of blurring lines between banking, insurance and capital

daniel mminele : south africa in the global regulatory context – progress, challenges and opportunities keynote address by mr daniel mminele, deputy governor of the south african reserve bank, at the 8th risk and return conference, cape town, 13 march 2014. * 1. * * introduction good morning ladies and gentlemen. thank you to incisive media for the kind invitation and the privilege for me to deliver the opening keynote address for this 8th risk and return south africa conference. this conference provides a good opportunity for dialogue and sharing of experiences as it brings together a wide spectrum of financial market participants, especially risk and investment management professionals, at a time when there are critical, wide - ranging and historic changes to the financial markets landscape. while there does not seem to be any major disagreement around the weaknesses and vulnerabilities that were exposed by the global financial crisis, there have been intense debates around how best to go about strengthening regulatory frameworks to restore confidence in financial systems. these range from appropriateness of certain regulatory standards based on country - specific circumstances ( danger of “ one - size - fits - all ” approach ), the speed and sequencing of implementation, to possible unintended consequences that could stifle innovation and development, reduce liquidity in certain markets, or affect the flow and cost of credit. i have been asked to speak on the progress, challenges and opportunities of global regulatory developments, and in particular, south africa ’ s experience. the global financial regulatory reform agenda is a daunting and gigantic project for all involved, and in the limited time available this morning one is unlikely to do justice to the task. following some remarks to set the context, i will talk about the regulatory alignment and supervisory change in south africa, make brief comments about our regulatory architecture reform, then touch on the 2014 g20 priorities for financial regulatory reform and look at where south africa is in relation to that. 2. from crisis to basel iii the costs of the global financial crisis were significant and included substantial job losses and depressed economic activity. the severity of it was compounded by a number of factors, including a pro - cyclical deleveraging process and weaknesses in the banking sector, such as inadequate and low - quality capital, and insufficient liquidity buffers. the interconnectedness of systemically important financial institutions ( sifis ) meant that these weaknesses and consequences thereof, quickly spread to other countries and regions. on the regulatory side, inadequate mandates, autonomy, resources and instances of regulatory