approach is required to bring about the necessary reforms. there is a need for the designated authorities mandated to 1 / 2 bis - central bankers'speeches maintain financial stability within the domestic economy a€ “ namely the ministry responsible for finance, the central bank, the financial services authority and the financial intelligence unit to have strong and clear mandates that promote effective coordination. this should be complemented by adequate and more robust legal and policy frameworks that are relevant to the seychelles context whilst also in line with international standards. the draft policy paper on the proposed financial stability framework, which will be at the centre of today's forum is the starting point. at this juncture, i wish to express my sincere appreciation to the united states department of the treasury office of technical assistance, particularly the financial stability expert, ms silvina vatnick, as well as the monetary and capital markets department of the imf for contributing toward the drafting and reviewing of the proposed framework. we now have the task of discussing, reviewing and providing feedback on the analysis that has been conducted and the main findings used to guide the proposed recommendations and way forward. each of you present in this room has come to represent an institution that has an important role to play in promoting financial stability and we must be fully aware of and embrace this role to individually and collectively assist in achieving this objective. i am therefore counting on your active participation, frank and constructive discussion to make today's exercise and the entire development and implementation of a new financial stability framework in seychelles a success. with these few remarks, i declare this consultation open and i wish you all fruitful deliberations. thank you. 2 / 2 bis - central bankers'speeches

rate cut and the new interest rate path. together with the joint central bank action on 8 october, the riksbank thus cut the repo rate by a total of one percentage point in the space of two weeks. other central banks have also substantially cut their policy rates. for example, the bank of england has cut its bank rate from 5 per cent to 3 per cent since the beginning of september. the reason for the repo rate cuts was to alleviate the effects of the financial crisis on the real economy, while ensuring that inflation stabilised around the target of two per cent. although monetary policy cannot be used to resolve the financial problems, it can help to dampen the negative effects on the real economy, without jeopardising the inflation target. the riksbank ’ s assessment is that the financial crisis aggravates the ongoing economic downturn resulting in weaker growth, a deterioration in the labour market and lower inflation. the repo rate therefore needs to be cut by a relatively large amount during a short period of time. in addition to the cuts already made, the assessment at the most recent meeting was that the repo rate needs to be cut by a further 0. 50 percentage points, to 3. 25 per cent, over the coming six months. the repo rate is currently less effective than normal as a tool for influencing the economy. the repo rate cuts in october did not lead to an immediate fall in interbank rates. the confidence crisis in the financial system has meant that the normal link between market rates and the repo rate has been broken. although market rates also declined, there remains an unusually large gap between the repo rate and mortgage rates in particular. the gap between the 3 - month lending rate to households and the repo rate has been around 100 basis points in less turbulent periods than that we are experiencing now. at present the gap is around 200 basis points. this is a lot in an historical perspective. although some mortgage rates have declined slightly following the repo rate cuts, the gap remains. mortgage rates are to a great extent governed by the banks'possibilities to borrow abroad. the effect of this is that interest costs for households with mortgages fall less than one might have expected. as a result of the financial crisis, the stimulating effect of a repo rate cut is thus less than it would have been otherwise. i would like to emphasise that there is unusually great uncertainty surrounding the assessments and forecasts at present and that it is