##c, the south african reserve bank saw in this arrangement a great opportunity for closer co - operation amongst the central banks of the region. in the beginning, however, it proved a major task to get recognition from the political leaders for the need of an independent committee of governors of central banks. in many of the participating countries the central bank is regarded, and often unfortunately also used, as just an extension of the treasury department of the central government. in succeeding to get the approval for the establishment of this committee of governors an important seed was sown in each one of these there are a number of other protocols, co - ordinated by other countries, for example : inland fisheries ( malawi ), marine fisheries and resources ( namibia ), livestock production and animal disease control ( botswana ), environment and land management ( lesotho ), energy ( angola ), mining and labour and employment ( zambia ), tourism ( mauritius ), industry and trade ( tanzania ), food, agriculture and natural resources ( zimbabwe ), human resource development ( swaziland ), and culture and information as well as transport and communication ( mozambique ). countries for the acceptance of the undeniable advantages, also for the politicians, of an independent central bank. a second major obstacle was overcome when approval was granted for the establishment of a small specialised secretariat and research facility within the south african reserve bank to serve the committee of governors. this avoided the need for adhering to the cumbersome procedure of communicating within the central banking fraternity through the conduit of the sadc secretariat, based in gaborone, the capital of botswana. the sadc finance and investment sector was formally established only in 1995, and the committee of governors held its first meeting on 24 november 1995 in pretoria. now, eighteen months later, this committee can already look back on a number of accomplishments, and can report good progress with a number of projects being pursued in the interest of promoting economic development in the southern african region. a number of technical subcommittees and working groups have been formed, consisting mainly of officials of the sadc central banks, to work on specialised projects. 4. the basic philosophy behind financial co - operation in the region before the governors ’ committee was established, sadc approached financial co - operation in the region on the basis of proposals made by european advisers, and was based mainly on the model of financial integration in the european community. the folly of this approach was immediately grasped by the governors at their first meeting. the

on global and domestic financial market developments, before updating you on the activities of the financial markets department over the past year. 2. global economic developments and financial markets while volatility in global financial markets declined during the first half of 2011, the third quarter witnessed a renewed rise in tensions, first driven by the congressional debate over the debt ceiling in the united states, and then by renewed concerns about the solvency of peripheral euro area sovereigns. greece may have been at the forefront of the news flow, but by late 2011, concerns had spread to a number of other sovereign issuers in the euro central banking in a balance sheet recession. panel remarks by mr jaime caruana, general manager of the bis, at the board of governors of the federal reserve system 2012 conference on “ central banking : before, during and after the crisis ”, washington, 23 – 24 march 2012. bis central bankers ’ speeches zone periphery, resulting in a sharp widening in spreads, which in turn spilled over to banks ’ funding costs and generally tighter financial conditions in the rest of the world. as already indicated, it again became necessary for central banks to respond in an unconventional manner : the us federal reserve lengthened the maturity of its securities portfolios ( in what became known as “ operation twist ” ) ; the bank of england and the bank of japan expanded their respective balance - sheets via additional securities purchases ; while the ecb for the first time ( and in two instalments ) supplied banks with almost eur1 trillion in three - year repo funding. the goals of these measures, however, were broadly similar : stabilizing the funding structure of the banking system, and thereby fending off the risk of a severe credit crunch. these measures helped to limit undue market volatility that risked forcing illiquid but solvent sovereigns into insolvency. at the same time, public and private creditors worked out a voluntary restructuring plan for greek sovereign debt. the market ’ s initial response was positive. risk indicators declined markedly from december 2011 to march 2012, with the vix index in particular falling to a level of 15, which was more or less around the lows recorded at the beginning of the financial crisis. intra - euro zone sovereign spreads underwent a sharp compression, as did bank cds spreads, while the reduction in risk - aversion spurred a marked rally in equities. yet many questions remained unanswered. for example, will vulnerable sovereign states take advantage of