or overreact to boom and bust cycles. many of the global imbalances in the world today can be related to the process of globalisation, which facilitated almost unlimited cross - border flows of funds. the wave of financial globalisation and innovation that has flooded over financial markets during the past two decades has also complicated the formulation and implementation of monetary policy. i would like to also make a few comments in this regard. globalisation has been brought about by a number of factors, including : - the increasing free flow of capital across national borders ; - the emergence of global financial institutions ; - a technological revolution that made geographical location almost irrelevant ; - an explosion of new financial instruments ; and - new insights and developments in the areas of asset management and risk management. these developments facilitated the significant cross border flows that emanated from global savings imbalances and a search for higher yields at a time when interest rates in developed markets were low. emerging markets have been affected by these changes in very particular ways. emergingmarket assets have increasingly become an acceptable and desired asset class in diversified global portfolios, recognised as both yield - enhancers and risk - reducers through diversification. this is partly attributable to the improved macroeconomic and financial profiles of many emerging markets. on the one hand, this appetite for emerging market assets has contributed to a steadier and more sustainable flow of funds to emerging markets : once accepted as part of an investment mandate, certain portions of portfolios are allocated to these assets for longer periods. on the other hand, large inflows of capital relative to the size of domestic financial markets have a significant impact on domestic asset prices, volatility, liquidity and external vulnerability. domestic asset prices become very sensitive to changes in sentiment or risk appetite among global investors. significant foreign investment flows to emerging markets have also to some extent contributed to imbalances between domestic and foreign assets and liabilities. countries that have received large amounts of inflows, while enjoying the benefits of these, should always keep in mind that they are also building up increasing foreign liabilities, which are likely to affect future outflows of dividends and interest payments. this holds equally true for foreign direct investment and portfolio investment. there is also an ever - present risk that foreign investors could withdraw again if the global environment changes. south africa is a classic example of a country with such an exposure, and it is precisely for this reason that the south african reserve bank has used the

actually grew by 26. 3 percent ( from 991 to 1252 ) between 2010 and 2015 but your branches in 1st to 5th class municipalities grew by 37. 5 percent ( from 304 to 418 ). certainly, the bulk of your branches are still in 1st and 2nd class municipalities but i am encouraged by the expansion elsewhere. what were just 35 branches in 3rd to 5th class municipalities in 2010 are now 73 branches as of end 2015. the numbers may be modest in absolute terms but the pace of growth is not trivial. which brings me back to your conference theme : “ thrift banks : sustaining the momentum for inclusive growth ”. now, a critical question comes to mind - - how can / do thrift banks contribute to inclusive growth? i think with some pragmatism and humility, we would be well - served to “ scope ” the response to this and say that thrift banks play a role in financial inclusion, which promotes inclusive growth. inclusive growth and the role of the thrift banks there are several policy issues which are being considered in the space of financial inclusion. for thrift banks, i think two of these are most relevant. first, we would want to ensure that there is symbiotic relationship between financial inclusion and financial stability. certainly, it defeats our prudential purposes if the attainment of one comes at the expense of the other. here, your expanding footprint strategy is a critical element. as banking services are offered outside of the traditional city - centers, the expectation is that the dynamics between inclusion and stability can very well change. the bsp and the bis are currently writing a paper on the relationship between inclusion and stability to explore the empirical linkages. the preliminary results suggest that information between a bank and its clients as well as the relationship between a bank and other banks in the vicinity do matter. this sounds rather straightforward but the implications on the operations of banks are not simple. in practice, this means each bank must maintain a continuing dialogue with its stakeholders. this kind of transparency is not just “ another disclosure regime ”. rather, it is communication that prevents surprises and allows stakeholders to make informed decisions, avoiding the sharp spikes that often create and / or exacerbate evolving issues. bis central bankers ’ speeches furthermore, banks must be cognizant that stakeholders do look at the localized community of financial service providers. in this day and age of electronic communication and affordable channels, financial consumers demand “ banking services ”, which may no longer