to run faster and faster and, if not exactly go for gold, at least aim for seriously higher levels of foreign exchange reserves. others argue that we should run in more than one event, pursuing not only higher reserves but also more active management of the exchange rate. so it is worth being clear exactly what we can hope to achieve in this area of our operations, and equally what we cannot. we can, and will, continue gradually to build up our official foreign exchange reserves to a respectable level in an orderly fashion in accordance with our balance sheet whenever circumstances allow us to do this. this will bring benefits, as i have indicated, in terms of lessening rand volatility and strengthening our international credit standing. the scale of our operations is, in fact, cumulatively more substantial than is sometimes recognised : over the six years i have described above, we have acquired, directly by purchases in the market, or indirectly, of the order of $ 30 billion. around $ 10 billion of this has been acquired in the past eighteen months. these are not negligible sums, particularly in relation to the size of foreign exchange activity in the rand. in the process, our operations have undoubtedly provided some moderation to the rise of the rand we have experienced over the period. this has in degree helped to alleviate some of the strains exporters and our manufacturers have faced from the rise of the rand. we fully recognise the difficulty businesses face in adjusting to those strains, and it is useful that our operations can help in this way. but our operations have to remain focused on rebuilding our reserves. it would not be sensible for us to switch to a different focus, of seeking more actively to manage the exchange rate, principally for two reasons. first, neither we nor anyone can claim with any confidence to know what would be an appropriate equilibrium exchange rate. it is much more sensible for us to pursue a stable monetary framework aimed at delivering low inflation and thereby help the market find a stable trading range for the rand - as indeed it has managed to do for extended periods over the past year. secondly, endeavouring to manage the exchange rate would jeopardise our success in delivering low inflation : countless episodes in the past around the world demonstrate that attempting to switch focus to the exchange rate means that the central bank loses control of inflation, with seriously damaging results to the prospects for sustaining growth in the economy on a continuing basis. so we can, through our continuing operations designed to rebuild the reserves, help in the

financial system by doing one or more of the following. it may choose to extend the maturity of its market operations ; it may coordinate closely with other central banks when there is an international dimension to the problem ; it may choose to widen the range of securities in its market operations or loan facilities ; or, it may choose to increase the frequency of its market operations. 9 we opted for the first three of these with the term purchase and resale operations announced on 12 december and 11 march. although we typically carry out purchase and resale operations with an overnight maturity, the two operations announced in march were for a much longer maturity ( the two march operations were both for 28 days ). both of these announcements were coordinated with the actions of four other central banks and were supported by two other central banks. in all of these operations, the range of eligible securities was essentially the widest allowed under the bank of canada act. for a full discussion, see m. zelmer, " reforming the credit - rating process, " financial system review ( ottawa : bank of canada, december 2007 ) : 51 - 57. for a full discussion, see liquidity risk : management and supervisory challenges, ( basel : basel committee on banking supervision, february 2008 ). a central bank may also choose to increase the range of participants in its operations and facilities. recently announced amendments, which will modernize the act, would allow for a further widening in eligible instruments for such operations. as required by these proposed amendments, the bank will publish its policy governing the use of these powers. 10 the bank will carefully consider the circumstances under which these powers would be used. in terms of its lending operations, the bank of canada is not legally constrained by its act in the type of financial instruments that it can accept as collateral under its standing liquidity facility ( slf ), a facility that can be used in both normal and in turbulent times. on 31 march, we announced that, in the future, we will take abcp securities that meet certain criteria – including transparency criteria – as collateral under our slf. we had two broad policy objectives in making this announcement : first, that the eligibility criteria should mitigate any risks to the bank that might be associated with accepting abcp securities as collateral for the slf. and second, we stated that the eligibility criteria should facilitate the development of a well - functioning market for abcp by promoting more transparency for investors and by encouraging an active secondary market for these securities. the bank has also