x p guma : low domestic inflation in an environment of high oil prices, vigorous household spending and credit demand and a widening current account deficit ; and the outlook for interest rates in south africa luncheon address by dr x p guma, deputy governor of the south african reserve bank, at investec, pretoria, 4 july 2006. * * * inflation in the world economy has declined significantly in recent years and has remained relatively subdued over the past few years despite a significant rise in commodity prices and strong economic growth. chart 1, based on world bank data illustrates the trend in world inflation, clearly showing the peak that occurred at a rate in excess of 35 percent per annum in the early 1990s and the rapid deceleration to rates around 5 per cent per annum thereafter. south africa ’ s inflation performance began to improve during the 1990s, as the next chart indicates ; and subsequent to the adoption of the inflation targeting framework, inflation as measured by cpix entered and has remained within the target range since september 2003. oil prices have risen sharply since 2003 ( as the next chart indicates ), on account of various determinants. during this year, the spot price of brent crude oil has increased dramatically from approximately us $ 59. 9 per barrel in february to levels around us $ 70. 5 per barrel towards the end of april and an average of us $ 68. 15 per barrel in june. continued brisk expansion in final consumption expenditure by households has been underpinned by a steady increase in household disposable income, continued buoyancy in the real estate and securities markets and what some describe as an accommodative interest rate environment. overall household debt as a percentage of annualised disposable income increased to a record level of 68 percent in the first quarter of 2006. robust growth in gross domestic expenditure and a concomitant strong increase in the value of merchandise imports resulted in a sizeable deficit on the trade account of the balance of payments in the first quarter of 2006. given the larger shortfall on the services and income account with the rest of the world and the somewhat subdued performance of south africa ’ s exports – notwithstanding the buoyancy of international commodity prices, the current account of the balance of payments registered a deficit equivalent to 6. 4 percent in the first quarter of 2006. interestingly, as others have observed, despite the sell - off in emerging markets since may, nonresidents have remained net buyers of south african financial assets and there have

and challenging environment, g - 20 countries have managed to make significant progress towards meeting their 2008 commitments. governor mark carney, in his capacity as the chair of the financial stability board ( fsb ) noted in an open letter to the g - 20 dated 2 september 2013, that major progress has been made in building stronger financial institutions and more robust markets through substantially strengthened international standards. however, work on this front is far from complete. governor carney stated that the g - 20 ’ s objective of strong, sustainable and balanced growth requires an open, integrated and efficient global financial system. clearly, one aspect of such a financial system is efficient and stable derivative markets that work for market participants in both the advanced economies and in emerging market and developing economies. this workshop is therefore of direct relevance to the global financial reform agenda. bis central bankers ’ speeches our challenge is to make sure that the reforms that are proposed at the global level for derivatives markets do not have adverse unintended consequences for emerging markets, and can be implemented in ways that ensure we remain active and attractive participants in global financial markets. a “ one - size - fits - all ” set of regulations without consideration of timing and scope may not be appropriate and reflective of where some economies are in terms of their financial market development. in order to meet these challenges, it is important that we understand the implications of the currently proposed otc derivative reforms and can act, collectively, in the appropriate global, regional and domestic forums to mitigate any adverse consequences and maximize their benefits for markets and our domestic and international stakeholders. the growing presence of emerging market and developing economies in the global regulatory reform process provides an opportunity to shape the outcomes of the process. 3. expanded role and responsibilities of emerging markets and developing economies the international financial standard - setting bodies were historically dominated by the advanced economies. today, emerging market and developing countries collectively account for about half of the global economy, it therefore is no longer feasible that they be excluded from important decisions that are made, which affect the management of the global economy and regulatory reform. as a result, following the crisis that started in 2007 the leaders of the g - 20 agreed to expand the membership of the international standard - setting bodies and to strengthen the mandate and capabilities of the financial stability forum, which was subsequently re - established as the fsb. this has helped these bodies to become more representative and will strengthen their role in developing and encouraging their members to implement policies in the interest of a stable global financial system.