. the appreciation in emerging market currencies, including the rand, has been mostly driven by external factors, such as increased global liquidity, the depreciation of the usd and renewed investor - appetite for more risky assets. domestic factors, such as relatively strong macroeconomic fundamentals and wider interest rate differentials, have also played a role. these gains, unfortunately, increase the likelihood of an uneven economic recovery. whilst the monetary and fiscal authorities in south africa have at times expressed concern about the impact of the appreciated currency on the overall macroeconomic balance, sarb policy remains that of no intervention in the foreign exchange market with the objective of managing the currency. the floating exchange rate regime helped to cushion south africa from more severe effects of the global crisis. the bank will, within the broader context of policy coordination with the national treasury, continue with its strategy of accumulating foreign exchange reserves when market conditions are conducive. over the past year, reserves accumulation was constrained by the volatility in the foreign - exchange markets, the level of global risk aversion and cost considerations. more recently, conditions in the foreign exchange markets have been somewhat more favourable, allowing the bank to increase its purchases of foreign exchange in a responsible manner. 5. south africa amidst the crisis as we are all aware, south africa was not immune to the global crisis, the domestic economy contracted for three consecutive quarters. the monetary policy tightening cycle which commenced in june 2006 came to an end in june 2008. the mpc was initially more concerned about the impact of multiple supply shocks on inflation. it was only later that global developments began to have a significant impact on the economy. keeping in mind that the mpc ’ s focus is on the medium to long - term expected inflation trajectory, and that there is a lag in the reaction of inflation to interest rate changes, the significant widening in the output gap and inflation continuing its downward trend after peaking at 13, 6 per cent in august 2008, allowed for the mpc to reduce the repurchase rate by 500 basis points between december 2008 and august 2009. the contraction in economic activity and the change in the monetary policy stance impacted the domestic bond market in two ways. firstly, while monetary policy easing exerted some downward pressure on bond yields, this was counteracted by increased supply of government bonds. given the rapidly slowing economy, revenue intake was substantially lower than projected, causing an increase in the budget deficit. increased risk aversion also resulted

benoit coeure : interview in phileleftheros interview with mr benoit coeure, member of the executive board of the european central bank, in phileleftheros, conducted by mr theano theiopoulou on 9 november 2014. * * * 1. why was banks ’ participation in the ecb ’ s targeted longer - term refinancing operations ( tltros ) lower than expected? there are many reasons, including the disclosure of our comprehensive assessment of euro area banks in october, for which reason they may have preferred to postpone their borrowing to december. having said this, the september outcome falls within the range of take - up values we had expected, based on banks ’ behaviour under previous programmes. 2. the volume of non - performing loans in cyprus is one of the highest in the euro area. moreover, lending to small and medium - sized enterprises ( smes ) entails higher risk weights and, consequently, capital surcharges. how could banks contribute to growth if lending is limited? household and corporate indebtedness in cyprus is among the highest in the euro area. the cost of risk remains elevated despite some recent improvements. in these circumstances, deleveraging is a natural phenomenon. nonetheless, banks should make good use of the available lending opportunities and support viable borrowers. the comprehensive assessment has confirmed that, on aggregate, the banking sector is adequately equipped with capital and that constraints on lending arising from the situation of banks are becoming less significant, both in cyprus and the rest of the euro area. 3. by becoming the supervisor of euro area banks, is the ecb able to completely eliminate the risk of financial crises in the future? the assumption by the ecb of the responsibility for the supervision of euro area banks last tuesday marked an important step in european economic and financial integration, probably the most important one since the introduction of the euro. it is a sharing of sovereignty but also a gain of sovereignty : for example, the cypriot member of the supervisory board of the ecb will now have a say in the supervision of large euro area banks. supervisory standards will be harmonised as the ecb ’ s banking supervision will draw on the best practices of the participating countries, and the ecb will draw on the information gathered in the comprehensive assessment to improve its supervision and foster convergence. besides, the single resolution mechanism and the bank recovery and resolution directive, with its new rules for dealing with banking crises entering into force in 2016, will