increasing the bank's reserves. at the same time, the bank also streamlined its reserve management structures and processes. as at 30 june 2003, the gross foreign exchange reserves of the bank amounted to us $ 7, 7 billion. of this, us $ 6, 5 billion consisted of foreign exchange, mainly us dollar, and us $ 1, 2 billion consisted of gold. the bank's borrowed reserves ( foreign loans ) amounted to us $ 2, 9 billion. the net reserves therefore amounted to us $ 4, 8 billion. given the level of reserves and an oversold forward foreign exchange book to the amount of us $ 3, 7 billion as at 30 june 2003, the positive nofp of the bank amounted to us $ 1, 1 billion, with the negative position having been expunged during may 2003. in managing its reserves, the bank strives to balance three main objectives. the most important objective is to preserve the capital value of the reserves. the level of the bank's reserves is closely 2 / 5 monitored by the international financial community and contributes to south africa's overall rating as a stable and safe investment destination. therefore, any erosion of the capital value of reserves will not only dent the general perception of the bank's ability to manage its reserves, but will also harm perceptions about south africa as a country. the second objective is to have adequate liquidity to enable the bank to meet its day - to - day foreign exchange commitments without incurring significant penalties arising from liquidating investments. the bank needs foreign exchange on a daily basis for its own transactions and commitments to its correspondent banks, to provide to its clients, such as the national treasury, and to manage liquidity within the domestic money market as part of its implementation of monetary policy. the third objective is to earn a market related return on the bank's gold and foreign exchange reserves within a framework of acceptable risks. although the main objective of a central bank is not to maximise profits, it should still generate sufficient income to cover its operational costs and to facilitate the implementation monetary policy. in order to balance the bank's objectives of having adequate liquidity for its daily foreign exchange commitments and earning an acceptable return on the investment of its reserves, the foreign exchange part of the reserves was divided into two broad tranches, namely a liquidity tranche and an investment tranche. the main purpose of having a liquidity tranche is to have sufficient foreign exchange available for the bank's daily

loans to students, which they repay as they enter the labor force and begin to earn. in the past israeli students have strongly objected to any significant rise in tuition. that is understandable. but significantly higher tuition payments are needed to enable the universities to attract the faculty they need and to continue to contribute to advancing israel's technological progress and prowess. in concluding, i must apologize for making so utilitarian an argument for strengthening the universities. for a good university is far more than a source of technological progress ; it is a repository and source of knowledge, of culture, of values, of civilization. that too is why a society – why israel – needs to cherish and support its universities and its system of higher education. thank you.