times of crisis. this has been the case with the current financial crisis where exceptional demand for the us dollar has strengthened the currency while weakening other currencies. in this regard, the fiji dollar is expected to weaken against the us dollar. the appreciation of the usd will augur well for exports to the us or goods priced in usd. however, this will be offset by the losses from the australian and new zealand dollars, both of which have weakened against the fiji dollar. while it is not clear where the trading partner currencies are headed, there is a general agreement that the us dollar will continue to strengthen against the major currencies. in addition, our external competitiveness could be affected by competition from asian economies, as they normally keep an undervalued exchange rate to boost their exports and services ( e. g. tourism ) sectors. • exchange rates : compared to the beginning of the year, the fiji dollar strengthened against the australian and nz dollars by around 12 and 13 percent, respectively. however, the fiji dollar fell against the us dollar and euro by 13 and 2 percent, respectively. • impact on economic growth : the risk to the fiji economy from the financial crisis is on the downside. this can be largely attributed to the expected negative effects emanating from the trade and financial channel. that is, if exports of mineral water, fish, garments, textiles & footwear and other domestic exports ( like agro - based produce ) potentially decline then this will naturally feed into lower production in these sectors. in addition, any slowdown in tourism would impact the wholesale & retail trade, hotels and restaurants sectors, as well as, the air transport and services allied to transport sectors adversely. furthermore, a reduction in remittances flows could suppress consumption expenditure. similarly, lower financial flows ( especially, fdi ) could lead to a decline in investment, especially in the building & construction sector. thus, domestic demand may be affected as a result of the global financial crisis. it is likely that the financial crisis will erode fiji ’ s growth prospects somewhat. • impact on fiji ’ s monetary policy objectives : in terms of the monetary policy objectives, the global slowdown will ease inflationary pressures. although there is some appreciation in the us dollar, oil prices have dropped more sharply. on a net basis, this is expected to ease inflationary pressures from oil. in contrast, it is likely that pressures on foreign reserves ( the underlying position of the balance of

macro - prudential supervision, there is still some conceptual work to be done. work on a well - equipped toolbox of instruments, for example ; instruments that might not only address banks, but also other financial market participants. conclusion ladies and gentlemen, following this digression, let me be clear on one thing : preserving financial stability is truly a herculean task. our aim must be to make the whole financial system stronger and more resilient. so it ’ s a logical step for us to target all the measures at our disposal towards realising this objective. but the ecb ’ s primary objective is still to maintain price stability in the medium term. stable prices are the basis for sustainable growth and a stable banking sector. our most recent monetary policy decisions do justice to this mandate. as an independent central bank, we are committed to explaining our actions to democratically elected representatives. but i personally find it particularly important to enter directly into dialogue with you. i am therefore delighted to engage in a discussion with you now. many thanks to the bundesbank for giving us the opportunity to do so today. bis central bankers ’ speeches