globally. there must be information sharing so that all actors are knowledgeable of what is happening in the related jurisdictions. timelines of inspections as assets under management increase, it is critical that inspections, both on site and offsite are performed on a timely basis to ensure that any breaches in regulations are addressed within a reasonable time - frame. inspections should focus on entire operations of the fund managers with emphasis also placed on the investment managers, investment advisers and custodial firms with whom business is conducted to ensure that exposure to reputational risk is also minimised. new markets and products i wish to spend a moment on the growth of the funds market. financial assets are probably the fastest growing assets in the world. across the globe, there has been an expansion in the growth of cross - border funds within individual countries both in latin america and the us. however, efficient coordination needs to be enhanced in order to be able to exploit the untapped potential of the relevant markets including back office roles and clearing and settlement procedures. what is needed also, is a more liquid pan - caribbean market with lower transactions costs. cross - border trading remains expensive, sometimes prohibitively so. in these circumstances, potential investors are not able to take advantage of price differences because transactions costs wipe out potential gains. also, it is essential that stakeholders do not behave in a way that undermines the development of deeper, more liquid capital markets or undermines competition or the safety of systems. at the regional level, new distribution models offer investors greater access to a wider range of products. however, this can lead to additional players in the financial services chain, blurring the responsibilities towards consumers. we must also closely monitor the risks and opportunities of new investment strategies and products including alternative instruments and the hedge fund sector that may be part of the development strategies of the market participants and the self - regulatory organisations ( sros ). market dissemination of information and valuation of securities need to be regular, timely, accurate and independent and market education - a key aspect of market development - needs to be enhanced. a more sophisticated and educated investor base can serve to allay market disruption and the process can be cost effective. there may be a role here for greater collaboration within the university in developing this educational role. there is also a perception that the current regulatory framework needs to be revamped to be able to keep pace with financial innovation so that it does not impose restrictions on creative and competitive products. we need to ask if the current framework encourages

figure 6. d, is calculated in the same way as in the figures i presented earlier. figure 6. c shows the mean squared gap. a lower mean squared gap for inflation entails a better acquisition of the inflation target ; that is a better stabilisation of inflation around the inflation target. a lower mean squared gap for resource utilisation entails a better stabilisation of resource utilisation around a normal level. consequently, the closer a point lies to origo, or “ south - west ” in the figure, the smaller are the total deviations of inflation from the inflation target and of resource utilisation from a normal level. from figure 6. c, it can be seen that the lower repo - rate path from the alternative scenario in the monetary policy report of october 2009 was closer to origo in both dimensions when inflation is measured in terms of the cpif. it thus stabilises both inflation and resource utilisation better. the mean squared gap for inflation measures the gap between the inflation forecast and the inflation target or, more precisely, the mean squared deviation between the inflation forecast and the inflation target during the forecast period. the mean squared gap for resource utilisation, measured as the output gap, measures the deviation between the forecast for resource utilisation and normal resource utilisation – more precisely, as the average squared gap during the forecast period. for more discussion of this see lars e. o. svensson, “ evaluating monetary policy, ” forthcoming in koenig, evan, and robert leeson, eds., from the great moderation to the great deviation : a round - trip journey based on the work of john b. taylor ( revision and update of a speech at uppsala university on 13 march 2009 ). one may ask why the focus should be on the cpif and not the cpi. in a situation in which extensive repo - rate changes have very large direct effects on the cpi, i consider it to be more appropriate to focus on stabilising the cpif around the inflation target, instead of the cpi. however, the assessment of the majority of the executive board was that the lower repo - rate path was not appropriate. at the monetary policy meetings held during the course of the year, the view of several members of the executive board was that the effects of the very low repo - rate levels on the economy and the financial markets were uncertain and that there was therefore reason to be cautious about reducing the