tools like scenario testing and the own risk solvency assessment are therefore fundamentally important. by thinking about the risks that could harm future solvency – and the possible responses to a stress – orsas promote the protection of safety and soundness of insurance firms, while providing insights into overall financial stability. right idea 2 : a regime that holds the right people to account the step - change in regulatory standards under solvency ii has several implications for the industry. risk professionals like yourselves have a central role to play in building models ; in using expert judgment to marry quantitative and qualitative assessments of risk ; and in making technical subject matter accessible to boards. your work will be vital to making these new standards a reality and thereby to establishing a stronger, more consistent standard of resilience across the eu. but amidst our work to embed new regulatory standards, it must not be forgotten that the responsibility for running insurers rests with their boards and senior managers. this leads to the second right idea we are putting into practice : the people running insurance companies should be more clearly held accountable for their actions. it is now clear that in some parts of the financial sector, the link between seniority and accountability had become blurred or even severed. the parliamentary commission on banking standards recognised this when they recommended a new regime for the seniormost managers in banks, ensuring their accountability. the principles underlying that regime are more widely relevant. those individuals that run financial institutions should act with integrity, honesty and skill regardless of whether they work for global investment banks, regional building societies or in the general insurance sector. solvency ii recognises this imperative. it requires both firms and regulators to monitor the fitness and propriety of staff with key responsibilities in the insurance sector. as a consequence, the bank of england is now working with other regulators to develop a regime for the key people in your industry. that doesn ’ t mean we are about to extend the banking regime indiscriminately. for one thing, unlike in banking, there will be no statutory provision for applying a “ reverse burden of proof ” in the insurance sector. in developing a regime tailored to insurance we will also have to consider the particular skills and roles that matter. this includes the central role of actuaries, which is one of the important bis central bankers ’ speeches functions specifically recognised by solvency ii. in 18th century london, the title “ actuary ” was often interchangeable with that of chief executive. it ’ s your role in backing entrepreneurship with science

commodity prices, investor positioning, and a reprieve from international credit rating agencies regarding a possible downgrade of south africa to sub - investment grade. the rand was also supported by more favourable terms of trade and an improvement in the current account balance that has reduced the perceived vulnerability of the currency to possible capital flow reversals. this made the rand more resilient even during externally induced risk - off episodes, appreciating alongside a stronger us dollar and / or depreciating by less compared to its emerging market peers. other financial assets followed a similar path of appreciation over the year. bond yields rallied and breakeven inflation declined. the yield on the benchmark r186 bond had declined from just over 9 % a year ago to a low last week of 8. 32 % while breakeven inflation on the r197 ( 5 - year ) inflation - linked bond declined from 7. 2 % in april last year to around 5. 8 % last week. with the lower inflation expectations, the ( fra ) market had, by last week, priced in more than one rate cut by the first quarter of 2018, with the 12x15 fra trading below 7. 0 %. the monetary policy committee ( mpc ) noted the improvement in the inflation outlook, which over the past year had allowed multiple downward revisions to the forecast, and expressed last week, at the conclusion of its most recent meeting, the view that we may have reached the end of the moderate tightening cycle. according to our most recent forecast, we expect headline inflation to fall below 6 % in the second quarter of 2017 and to remain within the target range for the remainder of the forecast horizon. notwithstanding the fact that there was one member of the mpc who preferred a 25 basis point reduction in the repo rate at the march meeting, the general feeling was that evidence of a more sustained improvement in the inflation outlook is required before interest rates can be reduced. the mpc remains concerned about the elevated levels of inflation expectations that are still around the upper end of the inflation target band. page 5 of 9 as you are aware, some of the positive trends we had been observing were interrupted by political events during the last week, which triggered a significant movement in the financial markets. since last monday, the rand traded in a range of 163 cents, between its strongest level of r12. 31 to the dollar on monday and its weakest level of r13. 94 around midday today. the currency did,