in fact, on a net basis so far in 2007, government is redeemer of bonds. the annual turnover on besa has increased from r8, 1 trillion in 2005 to r11, 6 trillion in 2006. the annual turnover is currently about 38 times the market capitalisation, indicating a very liquid market. in the current year to date, the turnover on besa is r5, 4 trillion. the city of johannesburg has contributed to the development of the bond market, being the first and only municipality in south africa to issue a bond. the city of johannesburg launched several municipal bonds since 2004, the first being a r1 - billion bond, which was neither guaranteed by government nor secured by city assets. however, this bond issue had an overwhelmingly positive response from the market, clearing at a spread of 230 basis points above the r153 government bond. this bond is currently trading at a spread of 90. the second bond issued was also a r1 - billion bond, partially guaranteed, issued at a spread of 164 basis points above the r157 government bond, was last trading at 120 basis points. two further bonds were later issued and were also well received by the market as they were issued at spreads of 154 and 120 basis points above the r157 respectively, and are now trading at compressed spreads of 105 and 104 basis points respectively. the city of johannesburg is at a mature stage to issue paper without any guarantee as the city now has a long - term debt rating of a +. with this improved credit rating and the narrowing of spreads, it is very clear that the city of johannesburg has a good standing as a borrower in its own right. it is not surprising then that they have undertaken a medium term note programme under which they can issue paper to a total tune of r6 - billion. actually the last bond was issued under this programme. non - residents are active participants in the south african capital markets, accounting for around 20 per cent of daily turnover on both the jse and besa. the participation of non - residents in the domestic financial markets is facilitated by a liquid market for foreign exchange. the average daily turnover against rand in the south african foreign exchange market is around usd10 billion, and non - residents account for around 65 per cent of these transactions. while gold was the initial magnet that attracted and spawned entrepreneurship, today only a few of the mining operations in johannesburg are still active. not only have the mining dumps formed a lasting landscape, johannesburg

depends more or less depend on their policies and behavior. banks keep excess liquidity because there is no a developed money market where they could invest this liquidity at all times at a fair market price. this market can not be developed on its own! it is banks ’ active liquidity management as opposed to a passive one that creates incentives for developing the markets. in this context, i would highly recommend you to implement stricter internal control policies and procedures, so that they can identify opportunity cost and missed profit opportunities. such a thing will lead to improved efficiency and competitive positions of the bank on the one hand and market development on the other. the bank of albania requires that you design management policies that are oriented toward profit maximization. the limitation to simple financial intermediation, such as collecting public savings and keeping them in the form of excess reserves waiting to be invested in low risk government papers, is not a characteristic of contemporary financial markets. all i mentioned above implies the indispensability for a more effective management under the conditions of enhancing the transparency. as to the structural excess liquidity, the bank of albania is currently targeting to keep it under appropriate levels, in order to increase the degree of the banking system reaction to bank of albania ’ s operational decisions. at the same time, we are carefully evaluating necessary refinements to monetary policy instruments, to further promote the trading in the interbank money market. beyond the structural liquidity position, another important issue is the existence of limits that certain banks apply in lending relations with one - another. from a pure academic viewpoint, it is quite easy to label these limits as an effort to ensure an oligopolystic structure in the market. i do not like to prejudice the prudent stance and measures reflected in these limits. however, i should state that in your business with non - bank clients, there may be identified elements, to which you take a higher degree of risk than the one materialized in interbank money transactions. considering the need for market development and the identification of the role of the bank of albania in these markets as the lender of last resort as indispensable, we have prepared and will soon enough implement a complete package of regulations, whose purpose is to establish incentives and minimize risks in the albanian financial market. concretely, these changes consist in : the law on repurchase agreements. there is compiled the draft - law, which enables the risk - free conduct of repurchase agreements among commercial banks