on their banks have meant that these international banks are doing less business within africa, opening up an opportunity for larger african based banks to enter new african markets. the integration process is however slow and not without its challenges, as i will elaborate on shortly. 3. benefits of cross - border banking growth in african cross - border banking has not been confined to south africa ’ s four largest private banks. banks from nigeria, morocco and kenya, including banks such as ecobank and the united bank of africa, have also taken advantage of emerging opportunities. the united nations world economic situation and prospects 2014. imf balance of payments statistics, february 2014. bis central bankers ’ speeches resulting increase in the availability of banking services to segments of the african population previously excluded from formal banking, has contributed to enhancing the culture of savings and entrepreneurship with obvious benefits for economic growth and development within the region. with this, africa has taken significant steps towards having a relatively mature banking system and has increased the resilience of the region to systemic risk 3. the arrival of regional african banks has improved the efficiency of the banking sector in host countries. they stimulate competition, and increase the diversity of available financial services, generally at transactional lower costs, improved quality and potentially lower interest rates 4. this in turn positively affects household savings and consumption and the availability of credit to businesses, leading to gains in employment and standards of living. furthermore, cross - border integration has the significant benefit of forcing the domestic banking regulatory and supervisory systems to modernize as larger capital flows within a country necessitate improved regulatory frameworks, technological innovation and efficient payment systems 5. these modernizations also create opportunities for greater financial inclusion, both with regard to individuals and smes. 4. challenges for integration while cross border banking creates significant benefits, it also is associated with challenges which need to be considered. unlike the euro area, where most banks have made relatively similar progress in implementing the basel iii framework, african jurisdictions are still at varying stages of implementing the various basel capital standards. first, operating in multiple countries creates supervisory and compliance challenges. the banks are expected to report to both home and host country supervisors who may use different regulatory standards or may interpret similar standards in different ways. in many cases, the same information is reported to different supervisors in different formats as per the relevant supervisor ’ s requirements, which often causes duplicate reporting or banking entities operating in different jurisdictions may have to provide reporting on potentially all three basel standards. these differences become even more pronounced when considering

if offset by higher wage and other input costs which offset the advantage faced by producers. the decision to keep the repurchase rate unchanged was an outcome of a careful weighing up of the different risks to the inflation outlook, including the contradictory pressures coming from the exchange rate and the global economy. the mpc was of the view that monetary policy was sufficiently accommodative to support the economy at this stage, but at the same time it was concerned about the upside risks to inflation, which is now expected to breach the target for a longer period than previously anticipated. it still appears that inflation is being driven by cost - push factors, as illustrated by the benign core inflation outcomes. however, the interaction between higher headline inflation and inflation expectations of wage and price setters is critical. to date inflation expectations appear to be anchored at around the upper level of the target range, but the longer inflation remains outside the target, particularly if it surprises on the upside, the more precarious these expectations become, and the greater the upside risk to the inflation outlook. the bank sees medium - term inflation outside the target range at this point, and regards the breach, although extended, to be temporary. in addition, the weak state of the economy also impacts on the approach taken. but we have to be vigilant on both sides. there is always a possibility of upside surprises to growth or a dislocation of inflation expectations from the target range, which could take inflation well above the target range. however, on the other side, although our assumption for european growth has been lowered, it does not contain the worst case scenario of a meltdown in the eurozone which would have severe implications for the global economy and south africa. although this is seen as a tail risk, it is not a remote possibility. as noted in the recent statement, the mpc is prepared to take appropriate action should the need arise. bis central bankers ’ speeches in conclusion, the european environment holds many uncertainties and possible unthinkable consequences, and it is difficult to preempt this in our policy choices. at the same time, the combination of rising inflation and sluggish domestic growth holds the risk of a stagflationary environment. monetary policy will maintain its focus on achieving the inflation target over the medium term, but will remain sensitive to the domestic economic situation. however, an accommodative macroeconomic environment cannot on its own generate the higher rates of growth that this economy requires for