legislation to include “ its soundness, stability and resilience ”. this is in line with principle 6 of iosco ’ s objectives and principles for securities regulation : “ the regulator should have or contribute to a process to monitor, mitigate and manage systemic risk, appropriate to its mandate ”. 10 see tucker ( 2011 ), “ building resilient financial systems : macroprudential regimes and securities market regulation ”, international council of securities associations. 11 this was highlighted by the bank of england in 2006 financial stability review p. 8 : “ many may have believed that the price of certain assets had become too high and the premium for taking risk too low. but there are business risks associated with acting on that view when others are not ; it may not only reduce profitability in the short run, but may also risk losing market share or failing to establish a foothold in a rapidly expanding market. these concerns often seem to have outweighed the risks to balance sheets associated with potentially overpriced assets. as a result, in the early part of this year, there appears to have been an extension of risk - taking activities by financial institutions, including some uk banks. “ bis central bankers ’ speeches the system safe and sound has made real progress in recent years, but it is not complete and absolutely must continue with energy. g20 leaders and finance minsters need to keep our we may not be able to abolish the occasional waves of optimism that grip humanity and the tendency to excess they set off. but we can and must dampen their effects on the financial system and economy. this must include changing the incentives that bankers face. it will include a simplification of the capital markets ; and constraints on the effects of exuberance through policies on leverage, capital and liquidity – applied beyond banking where warranted. and it must include macroprudential regimes that help us to refresh the microregulatory regimes and enable the authorities to take away the punchbowl when the party threatens to get out of control. markets will, in time, forget about the risks, but the system will be safer if we succeed in building official institutions that do not forget. parliament can underpin that by holding us to account in this endeavour, as it does on monetary policy – incentives matter in the official sector too. that will make for a safer and sounder financial system that can meet the abiding needs of the economy as a whole. and, to those

bill. new fiscal anchors may be required to ensure sustainability, in addition to the expenditure ceiling. we must choose public - sector investment over consumption. this is an extremely clear statement of intent to improve the fiscal balance, and to do so in a way that favours investment and is therefore good for longer - term growth. we are clearly well past the point where we could hope to crowd in investment simply by raising spending and boosting demand. 2 see http : / / www. treasury. gov. za / documents / mtbps / 2018 / speech / speech. pdf. page 4 of 8 with rising long - term interest rates, credit rating downgrades and tax increases, the case for fiscal stimulus based purely on spending aggregates is well past its sell - by date. government cannot keep on dissaving. ultimately, south africa remains a low - saving economy. we can improve savings rates, especially through fiscal policy, but we are not going to be a high - saving economy for the foreseeable future. for this reason, we need to get to a position where we can safely and sustainably fund investment demand in excess of local savings. instead of bemoaning a weak current account, we need to develop a strong capital account. getting there is likely to require larger capital inflows into equities and direct investment, and less into government bonds. one attraction of these investments is that when growth weakens, profits decline and outflows diminish, which keeps the current account under control in low points of the business cycle. another, perhaps more critical, advantage is that these kinds of inflows help growth. attracting investment of this nature is central to the president ’ s growth vision, as was articulated most recently at the investment summit he had convened last week in johannesburg. reducing government ’ s appetite for borrowing is a priority for our new finance minister. to sum up this discussion : south africa is still a country with significant twin deficits. they are smaller than they were in 2013, but they are still relatively large. their scale is a source of vulnerability, as is their composition. going forward, we need to reduce our fiscal deficits, and we need to ensure that our borrowing is more productive. we are not saying we need to keep our current account deficit as small as possible. one does not come to an investor conference in new york to say that capital inflows are a source of vulnerability and that we don ’ t want them