lessons ; i will pick three : • first, the inadequate assessment of counterparty risk, a task fundamental to lending and investment decisions, was in many ways at the core of the problem. key market participants were allowed to grow through greater leverage and alter market terms in crucial ways, largely unchecked by traditional disciplines. commercial banks, for whom judging credit risk is their life blood, were as guilty as any other institutions. traditional practices of creditors of covering their exposures by requiring collateral that was marked - to - market proved insufficient as market values fell, creating a circular and expanding effect. • second, market participants shared an insufficient recognition of the role of market liquidity in risk management. an important point here is the link between credit and market risk, and the fact that market prices can change sharply when key market participants pull out. in the proverbial “ race for the door, ” nearly everyone gets trampled. • the last point i will note relates to the over - reliance by practitioners on quantitative tools. sophisticated measurement techniques can help greatly in providing insights about the dimensions of risk and sources of possible problems. but, like chains, models are only as strong as their weakest links. every model has assumptions that must be tested, and its limitations must be understood. during periods of market stress nearly “ all bets are off ”. business practices change, otherwise stable and expected correlations in market rates and prices disappear, and sometimes panic ensues. well thought out and designed contingency plans and scenario analysis tailored to specific strategies and portfolios are necessary to prepare for these events and to evaluate an institution ’ s risks. that point was brought home last year. measuring market and credit risk in banks fortunately, progress is being made as banking organizations - typically the largest us and foreign institutions - find better ways to quantify their risks. with market risk - the “ easy ” one - the federal reserve and other regulators built on industry practices for measuring a bank ’ s “ value at risk ” when implementing a new regulatory capital standard for the banking system last year. basing capital requirements on a bank ’ s internal calculations of its largest expected daily trading loss at a 99 % confidence level was an important step, we thought. it produced a standard far more sensitive to changing levels of risk than was the earlier approach. it provided a reasonably consistent standard among banks and also was compatible with current management practice of the world ’ s more progressive banks. last year ’ s events have not changed our view

, it comes as a reflection of the seasonality which is typical of balance of payments figures. second, we look to normalisation in the accumulation of foreign assets, which has quickened considerably since the middle of the past year in the context of strengthened external, including geopolitical risks. our medium - term economic growth outlook is essentially the same. 1 - 1. 5 % gdp growth in the current year is expected to accelerate gradually to 2 - 3 % in 2021. having said that, our forecast will largely depend on the timeframes and successful implementation of the national projects along with other fiscal policy decisions. discussions are currently underway about possible options of spending the liquid part of the national wealth fund in excess of the 7 % of gdp cap. as we look into such options, it is imperative that we remember the key objective of the fiscal rule, which is to reduce the reliance of the economy, of the real exchange rate and of public finances on a volatile energy price environment so that they all become stabilised in a state equivalent to the oil price cut - off. we have largely delivered on this objective, with the impact of oil price fluctuations on the russian economy having considerably weakened. current suggestions are essentially focused on changes to the rule. they could result in either direct or indirect change in the cut - off price, entailing a strengthening of the real ruble exchange rate and undermining competitiveness of our products. alternatively, the stabilising mechanism of the fiscal rule could be undermined, yet again adding to the vulnerability of the russian economy to fluctuations in external environment. more so, the 7 % of gdp cap was set a long time ago ; yet another review is needed to establish whether this volume of liquid assets is adequate to resist to sharp and lengthy change in external conditions. as we review these and similar suggestions, we urge to fully consider the benefit and loss balance driven by change in macroeconomic conditions which may be tangible enough. approaches to fiscal and structural policies will have a significant impact on both our forecast and estimates of the balance of risks for inflation. this will in turn determine the monetary policy path. 3 / 3 bis central bankers'speeches