credit rating agencies and development of internal controls and it systems. in absence of credit rating agencies, pakistan is developing further role of private sector credit information bureaus, and independent debt / financial advisories etc. the gaps in the rating agencies are of particular concerns for sbp, given its heavy reliance of standardized approach under basel ii. sbp has to further upgrade its capacity for supervisory review ( pillar ii ) and a core group of supervisors will be trained in this shortly. lastly, there is need for more intensive capacity building of industry and sbp. greater international cooperation in strengthening the capacities of developing markets in risk management and emerging supervisory approaches would be key to enhancing effectiveness of vigilance and oversight both at bank and central bank level. conclusion. being autonomous and effectively empowered under the banking companies ordinance, 1962 sbp has adopted a rigorous but flexible regulatory framework which helps to keep banks exposure within tolerable range, while allowing them opportunities to enhance and diversify their businesses. banking sector has played a key role in supporting real sector development whose performance and macroeconomic stability have together re - inforced banking sector performance. all time high profitability and structural transformation of banking sector has attracted substantial foreign capital in banks which given its innovations and practices will augur well for strengthening and sustaining banking sector performance. proper enforcement of regulatory framework has been helped by a strong sbp ’ s independent supervisory and surveillance mechanism and validation process of the external auditors. effective oversight has induced banks to enhance their corporate governance and compliance with laws and regulations that also follow international accounting and disclosure standards. despite these achievements, both central bank and banks have to continue with broadening and deepening of structural reforms to help enhance financial services penetration and address the outstanding vulnerabilities in the system, while facilitating industry smooth adoption of risk measurement and management systems advocated under basle ii.

italy and the others? before the crisis there were marked differences in wage costs and competitiveness, in greece in particular. these persistent differences have created serious tensions within the euro area. macroeconomic imbalance adjustments are not made via the exchange rate in the monetary union. that ’ s why it ’ s essential that the labour market and the goods and services markets work well. the bank for international settlements is worried about risks caused by monetary policies that are too accommodative. what ’ s your reply to that? our main objective is to ensure price stability. the financial crisis has created deflationary risks. our monetary policy measures have played a key role in the economic recovery, which is necessary for inflation to gradually return to levels in line with our objective. the question is knowing whether the central bank has gone too far in its monetary policy easing. now that the gap between growth potential and real activity is narrowing, have we accomplished our mission? at this stage, my reply is no. the economic expansion that is under way is not yet feeding through into higher inflation. we are not changing our priorities, but we must take into account the improvement in economic conditions when calibrating our measures. should an end date for qe be announced? no new decision has been taken since the governing council meeting on 7 september. we had concluded that a very accommodative monetary policy stance would remain essential to our mission and that we would decide in the autumn on the calibration of our purchase programme for the period beyond the end of the year. 2 / 2 bis central bankers'speeches