credit is functioning well in every aspect. the international credit markets are still largely closed to swedish companies and they cannot borrow from foreign banks to the same extent as before. the riksbank has also granted special liquidity assistance during the autumn to kaupthing bank sverige ab and carnegie investment bank ab. the liquidity assistance was offered in the form of loans against collateral and at a higher interest rate than on normal loans. the market turbulence and the great uncertainty that prevailed were reasons for granting liquidity assistance to safeguard financial stability, even though these institutions were relatively minor participants in the swedish financial market. confidence in the swedish financial system could have been seriously damaged if a failure like the one at lehman brothers had been allowed to occur. the riksbank ’ s assessment was that the two banks were experiencing temporary liquidity problems, but that their solvency was not threatened. finansinspektionen later revoked carnegie ’ s licence to conduct banking activities owing to serious deficiencies in the company ’ s risk management and violation of the law concerning asset management. the decision to revoke the licence thus had nothing to do with carnegie ’ s liquidity problems or with the riksbank ’ s loan. carnegie is now owned by the swedish national debt office and the riksbank ’ s liquidity assistance has been repaid. the riksdag ( the swedish parliament ) has also introduced a new act concerning support to credit institutions, which will give the government the opportunity to take the necessary measures to strengthen stability in the financial system. for instance, a government guarantee programme has been presented to support the banks ’ and mortgage institutions ’ medium - term funding, and a stability fund has been established to manage potential future solvency problems in swedish institutions. the current situation despite the crisis in the global financial markets and the increasingly gloomy economic prospects, the assessment is that the swedish banks still have good resilience to facing the situation that has arisen and future developments. 1 the losses arising from the international crisis have so far been limited, not least in an international perspective, and the swedish banks have good financial strength. in addition, most of the banks ’ borrowers have a good ability to pay their loans. to summarise, the riksbank ’ s assessment is therefore that the stability in the swedish financial system is satisfactory. but it is important to emphasise that the measures taken by the riksbank and other authorities are currently a necessary condition for this to be the case.

mr. stals elucidates the opportunities and concerns relating to the south african economy address by the governor of the south african reserve bank, dr. c. stals, at “ forex 97 ” : 39th international congress of the association cambiste internationale held in toronto on 30 / 5 / 97. 1. the new south africa after three years it is now just more than three years since the fully democratic election of a new government for south africa took place in april 1994. mr nelson mandela ’ s government has now firmly established itself, and has succeeded in allaying many of the fears that existed at that time, both in south africa and internationally. not all the developments in south africa over the past three years were positive and some major challenges still remain for the future. on balance, however, all reasonable south africans will agree that the reforms in the country succeeded in averting a major disaster and in opening up many new opportunities. one of the most encouraging developments is a growing demonstration of tolerance and comprehension by most south africans of the changing environment, and an unflagging determination to make the new south africa succeed. there is a deepening spirit of co - operation amongst the various groups, representing a complex multi - racial community. more and more joint public and private sector projects emerge, providing further support to the integration of all south africans in a single community. the new government has established itself as a stable government with the prospect of being in control of the country for a long period of time. important outstanding constitutional issues were resolved, such as the conversion of the interim constitution of 1994 into a final and more permanent version, and the operational relationships between central, regional and local government authorities. the economic growth rate improved, and over the past three years averaged 3. 1 per cent, compared with only 0. 6 per cent over the nine years from 1985 to 1993. the government ’ s initial macroeconomic policy was mainly based on a social and upliftment programme referred to as the reconstruction and development programme ( rdp ). with its emphasis on providing in the desperate social needs of many disadvantaged south africans without recognition of the factual constraint of limited overall resources, the rdp met with justifiable scepticism from many economists. its asymmetrical approach was rectified when the government in june 1996 supplemented the rdp with a macroeconomic strategy for growth, employment and redistribution ( gear ). in terms of the gear programme, structural economic adjustment must be implemented to