stability has become part of its extended mandate, which is being formalised in the draft financial sector regulation bill of 2013. the revised bill is expected to be tabled in parliament later this year. planning for the implementation of the twin peaks regulatory model is proceeding. this model locates the regulation and supervision of both banks and insurance companies within the bank and allocates market - conduct oversight to a new authority that will replace the financial services board ( fsb ). the envisaged changes will have a significant impact on the bank in terms of responsibilities and resources, with a sizeable increase in personnel expected. although we have to wait until the legislation is passed to give full effect to the envisaged changes, we have still paid attention to our financial stability responsibilities : the bank supervision department ( bsd ) has increased its supervisory vigilance domestically and its role on the basel committee on banking supervision ( bcbs ) ; the bank ’ s financial stability committee ( fsc ) meets regularly and work is being done to develop a macro - prudential policy toolkit. this is unchartered territory and a challenge faced by most countries. fortunately, our banks and the financial system in general have remained stable, despite the difficult global and domestic environments. let me now turn to the annual report the financial statements presented to you today show that the bank has again recorded a loss. as i explained in some detail in my address to shareholders last year, the bank is not driven by a profit motive, but rather acts in the best interests of the country. the group recorded an after - tax loss of r1, 6 billion in the year under review, compared with the r1, 3 billion loss in the previous financial year. once again, the major source of our losses emanated from the holding of foreign exchange reserves. net interest income earned on the country ’ s foreign - exchange reserves remained constrained by low global interest rates as bis central bankers ’ speeches monetary policy in the advanced economies remained highly accommodative. at the same time, costs increased, including those associated with the introduction of the new currency in 2012 which were carried over into the following financial year, and staffing costs which rose as a result of salary increases and additional appointments required due to the expanded operations of the bank. although the losses recorded arose from the bank performing its functions in the interest of the economy, we remain committed to containing costs and maximising operational efficiency, and are confident that the bank will return

volatile exchange rate. the average daily turnover against the rand in the domestic foreign exchange market declined to just below us $ 6 billion in 2002, and remained fairly subdued at us $ 7, 7 billion in 2003. in 2004 to the end of september, the average daily turnover against the rand increased to above us $ 8 billion, and reached levels last recorded in 1999. we continue to see active participation by non - residents in our forex markets, especially in the swap market, where the share of non - residents currently amounts to around 65 %. non - residents accounted for about 60 % of total turnover in the foreign exchange market. higher turnover generally correlates positively with market activity and also provides a good measure of market liquidity. liquidity in the rand market usually increases when the currency behaves in a predictable manner. however, in an uncertain trading environment, bid - offer spreads widen and the market loses its depth as market participants become reluctant to quote prices, which was the case in 2001. during the latter part of 2001, bid - offer spreads widened to approximately ten cents ( from only three cents earlier in that year ) on regular trading amounts. conditions have improved drastically since then and spreads have narrowed back to approximately three cents currently. the price discovery mechanism in our forex markets now follows a much more normal pattern of two - way - risk. given that you are forex dealers, there is no need to elaborate. many of you have lived to be able to tell the story of the rand much better. one thing seems to be confirmed now : the rand is no longer a one - way downward bet. hopefully some of the lessons learnt in this regard, in the dealing rooms, were not too expensive! conclusion as you can deduct from the above, there are many areas where the bank has daily contact with yourselves in the market place. we value these relationships dearly. it is through yourselves, the banking industry and financial markets in south africa, that the bank is able to implement monetary policy. you are an essential pillar in our monetary policy transmission mechanism. we wish you well as an organisation. we hope that you may grow from strength to strength. once again thank you for the role you play in enhancing the reputation of our financial markets. enjoy the evening with us and have a safe journey home. thank you.