longer - term refinancing operations ( announced in june 2014 ), would increase the size of its balance sheet by roughly 1 trillion euros to 3 trillion euros, a level last seen in early 2012. bis central bankers ’ speeches governing council will consider in the first quarter of 2015 whether to embark on a sovereign bond purchase programme. japan ’ s economic performance has also disappointed, with the hike in the value - added tax ( vat ) partly to blame. pre - emptive buying ahead of the vat increase in the first quarter of the year resulted in a positive performance, but this was followed by contractions in the second and third quarters, pushing the japanese economy back into recession. furthermore, although inflation is above the 2 percent target, this is largely due to the vat increase and inflation is expected to fall in the early months of 2015. in response to recessionary conditions and still muted inflation, the bank of japan ( boj ) responded by raising its monetary expansion programme in october by an additional ¥10 – 20 trillion to ¥80 trillion ( an equivalent of just under us $ 700 billion ) per year. clearly, we are seeing a divergence of policy in the major advanced economies. this suggests that central banks need to weigh the spill - over effects of tightening policy in the us against accommodative policies in europe and japan in determining their own monetary policy trajectories. our sense is that the impact of us tightening will dominate, but that it would be tempered somewhat by ecb and boj stimulus plans. however, it is clear that global financial conditions have become less hospitable for countries with large external financing requirements. this process has already delivered a bumpy ride for south africa, as it has for some other countries. impact of normalisation on south africa like most emerging markets, south africa benefited from the massive liquidity injection into the global financial market following the great recession. inflows of capital meant that the current account deficit was comfortably financed, while it also resulted in significant appreciation of the rand. this in turn helped to contain inflation, allowing room for accommodative monetary policy over a fairly extended period. however, these trends started to reverse in may 2013 in anticipation of us monetary policy normalisation, following indications to that effect from the fed. this saw a widespread depreciation of emerging market currencies, which intensified with the actual implementation of the us federal reserve ’ s asset purchase tapering programme starting from january 2014

mr mboweni speaks on the role of the south african reserve bank in developing the economy speech given by mr tito mboweni, governor of the south african reserve bank at the western cape exporter of the year awards dinner on 1 september 1999. * * * many central bank governors fight a constant battle against public misconceptions about the central bank ’ s role in the economy. after only a short period in the job, i have realised that i, too, will have my work cut out for me in explaining the south african reserve bank ’ s responsibilities. as i discovered last week when i took part in a phone - in programme on sabc radio, there are people who mistakenly believe the bank can provide them with personal loans, or loans for their businesses. i had to explain that i am not a personal banker with a limitless cheque book. i was also worried to find that some of the callers did not have a good understanding of the relationship between interest rates and inflation. once again, i realised the need for education and for continued emphasis on the bank ’ s main task – the achievement and maintenance of financial stability. there might be people who are getting bored with my message. but i think it is well worth repeating, as even people with a good understanding of the economy sometimes expect us to be miracle - workers who will bring new life to the economy. when i was invited to speak here tonight, my hosts asked me to talk about the role of the central bank in developing the economy, with a particular focus on exports. as was highlighted in the governor ’ s address last week, the central bank ’ s main contribution to economic development and export growth is to achieve price stability. that must come as a disappointment to those exporters here tonight who hoped i would say something about the rand ’ s exchange rate against the currencies of sa ’ s major trading partners. the best that i can do on the topic of the exchange rate is to recount a story about the euro, which has recovered somewhat from its weakness against the dollar. please bear in mind that i tell the story with my tongue firmly in my cheek. research published last week by 4cast, a london - based economic consultancy, suggests that an inverse relationship has developed between the performance of the euro and the frequency of statements by european central bank officials about the currency. the periods during which central bank officials kept quiet about the euro coincided with relative stability or appreciation of the euro against the dollar. the