is timely for regulatory authorities and policy makers to take stock and redouble our efforts to support investor education, investor protection and financial literacy. 3 / 5 bis - central bankers'speeches protecting consumers is at the heart of what we do at the central bank. we know that consumers who are well - informed and understand financial products and services are better placed to make good financial decisions and to look after their interests. these consumers are less likely to be vulnerable to harm from firms that are not securing their interests, and they are less vulnerable to frauds and scams. this is why high levels of financial literacy empower consumers to make effective and informed choices to safeguard their financial well - being. irish authorities are currently in the process of developing a national financial literacy strategy for ireland, something which we at the central bank strongly support. ireland's financial sector has an important role to play in supporting the savings and investment union and providing opportunities for retail investors to participate in capital markets. the sector has demonstrated high levels of resilience while continuing provide critical services to households and business in ireland and abroad. as with the european economy as a whole, over the last decade, the irish financial services sector has also continued evolve, in terms of its size, complexity and international connectedness. these developments are, of course, a positive for ireland, and positive for their contribution to european financial markets. we of course must be mindful that an expanding and more complex financial sector may poses risks that need to be managed. this reinforces the importance of effective regulation and supervision – to maintain financial stability and to protect consumers and investors, both within ireland, europe and globally. as i mentioned earlier, we recognise that we too must change to keep pace with the changing world. i would like to finish by outlining some of the work we are doing in this regard. as you will be aware, we have introduced the individual accountability framework ( iaf ). the iaf is all about helping underpin sound governance across the financial sector by setting out clearly what is expected of well - run firms. for both firms and the regulator it should be seen as a complement to the wider focus on governance, culture and behaviour. for the central bank our hope is that along with wider efforts, the iaf will help make firms take more ownership and responsibility for running their business and addressing any risks or deficiencies they may have. in an increasingly technological and rapidly changing world, the need for effective governance underpinned by a strong

is, therefore, important to capture not only the probability and magnitude of adverse impact of policies on inflation but also the damage that could be done both to price stability and inflation expectations in the event, even with very low probability, the risks do materialise. hence, there is a need to continue to demonstrate, in a credible fashion, by words and deeds, commitment of both monetary and fiscal authorities to stabilise inflation expectations. the government finances present a mixed picture since the presentation of the review, with greater comfort in regard to the central government ’ s borrowing programme and some discomfort at the trends in revenue deficit relative to budget estimates. the conduct of market borrowing programmes of several states continues to be a matter of concern. a distinguishing feature of the current year has been the strong growth in bank credit. non - food credit expanded by 18. 1 percent in the current financial year up to december 24, 2004. the growth in credit for housing and consumer durables continues to be a matter of some concern to the extent it reflects on credit quality, but a source of comfort is that the overall credit growth of late is reasonably well dispersed across sectors. though credit growth has shown an uptrend, money supply ( m3 ) growth has remained subdued at 7. 2 percent. by and large, the monetary trends are within the projections made in the review. the financial markets generally remained stable. though there was upward movement in interest rates in money and government securities markets in november, the interest rates have since reverted closer to levels in october 2004. the yield spread between highly rated corporate paper and government securities increased. furthermore, the spread between long term and short term government securities has declined. in the credit markets, the benchmark prime lending rates remain generally unchanged though interest rates for housing have marginally firmed up. public sector banks increased their rates for deposits of over one year. in the external sector, conditions in our forex market continue to be orderly. global developments in regard to output growth, currency markets, etc. have not been divergent from our expectations in the review and may continue to be so though uncertainties in regard to oil prices will continue, albeit in a muted fashion. since march 2004 the rupee has tended to appreciate against the us dollar and depreciate against other major currencies, primarily reflecting the weakening of us dollar. there are, however, some developments during the current year which are noteworthy. first, foreign exchange reserves increased by us $ 18. 2 billion,