had been negatively impacted. the crisis has forced many central banks to look more closely at the build - up of financial imbalances in the wider financial system and to undertake regulatory reform which has expanded central banks ’ role with regard to ensuring financial stability. the latter is known as the so - called macro prudential regulation and which concerns itself with more than just idiosyncratic risk and the soundness of individual institutions but is concerned with the soundness and stability of the entire financial system, i. e. systemic soundness. fortunately, south africa and its financial institutions fared well during the crisis. our policy makers however appreciated that there was no room for complacency and decided to be proactive. hence in 2007 the national treasury launched a review of south africa ’ s financial regulatory system. this work culminated in the minister of finance publishing a policy document, a safer financial sector to serve south africa better, also known as the “ red book ”. in terms of the reforms outlined in the “ red book ” the south african reserve bank would assume responsibility as macro prudential regulator, micro prudential regulator and resolution authority for the wider financial system. this means that the bank ’ s previous role as micro prudential regulator of banks ( since 1990 ), would be expanded to include prudential regulation responsibility over the insurance sector and all financial market infrastructures, including the payment system, central clearing counterparty and trade repositories. moreover, the bank is also becoming the systemic or financial stability regulator. it is important to note that the bank had been pursuing financial stability since 2001. however, it was an implicit mandate. since 2010, the bank has had an explicit financial stability mandate complementing its price stability objective. this, however, is in line with the mandates of most central banks around the globe. in pursuit of this expanded role, a financial stability oversight committee ( fsoc ), chaired by the governor, will be established which will include representation from the bank, the market conduct regulator and the national treasury. the fsoc will have financial stability policy responsibility, in the same way as the monetary policy committee does for price stability, and will be able to hold to account various authorities or economic agents on actions to be taken to mitigate against / reduce systemic risk. research underpinning of the work of the sarb as systemic regulator the immediate challenge of the fsoc which is the same for other financial stability regulators around the globe, would

manage around usd 3 trillion in 2007 – 30 - fold increase in 17 years – and are probably of this order of magnitude or larger today. and finally, the notional value of all categories of derivatives contract has increased by a factor of 20 over the past two decades to stand at more than usd 600 trillion, ten times world gdp. these figures give a measure of the structural transformation seen in the global financial markets over the last two decades. i consider that we are a long way from fully understanding what those dramatic transformations mean in terms of concentration and the spreading of real risks, in terms of the additional unpredictability of the behaviour of the system as a whole and, therefore, in terms of potential systemic financial instability. there are still many issues on the agendas of the g20 and the fsb that need to be implemented. my message on these is straightforward : these agendas should be implemented fully and equally on both sides of the atlantic. rigour and a level playing field are the two key terms in this context. apart from the issue of systemically important financial institutions, which will figure high up on the upcoming g20 agenda, there are at least six other items where progress needs to be made in the design and / or implementation of reform. these are : accounting, ratings, shortselling, compensation, otc derivatives and alternative investment vehicles. accounting, ratings and short - selling practices are all issues that need to be addressed in order to lessen the degree of procyclicality in our financial system. on accounting, the g20 summit in london decided that accounting standard setters should reduce the complexity of standards for financial instruments, achieve clarity and consistency in the application of valuation standards internationally, and make significant progress towards a single set of high - quality global standards. the announcement made in june 2010 by the iasb and fasb on their convergence strategy is welcome, also because time lags in implementation are considerable. if the sec decides in 2011 to incorporate ifrs into the us domestic reporting system, this would mean that us issuers would potentially not actually report under these rules until 2015 or 2016. moreover, even though many attempts are underway, in key accounting areas there are still divergences to be addressed. for example, the accounting for financial instruments still diverges considerably between the iasb and fasb on the role of market valuation. as regards ratings and the g20 ’ s call to engage in decoupling the financial system from external ratings, work is