net energy importers like india, the recent firming up of oil prices on production cuts by major suppliers presents risks to current account deficit and inflation. the financialisation of energy markets and changing underlying dynamics in the global oil market are adding an upside risk to prices, though the demand is subdued. while break - even costs for shale production have apparently increased, investors have turned risk averse and are focusing on cash flows and financial returns. this may reduce the flexibility of shale output in filling the shortfalls created by opec plus production cuts. policy challenges so, in this environment, what are the policy challenges faced by emes? 5. in the aftermath of the global financial crisis ( gfc ), several emes have embarked upon structural reforms to reorient their economies. in the short - run, however, these reforms inevitably 1 / 3 bis central bankers'speeches involve sacrifices, including in terms of losses of growth momentum. conventionally, these reforms are best undertaken in the expansionary phase of the economic cycle. with growth slowing down in a synchronised manner across borders, the space for undertaking and / or pushing ahead with structural reforms is likely to become severely constricted or even deterred. but the fact remains that we need more structural reforms precisely when the economy is slowing down to ensure durable momentum to growth. this is a point which i would like to stress. 6. as the global economy loses speed and with fiscal space getting squeezed, the focus in emes as well as advanced economies is likely to be on monetary policy as the first line of defence. central banks may once again be expected to assume the mantle of guardians of the world economy. the global financial crisis has, however, exposed several limitations of conventional and unconventional monetary policy tools. in despair, some have turned to the heterodox evolution of ideas that has come to be known as modern monetary theory. while the jury is still out on this idea, i have my own strong reservations on this due to its serious downside risks. in the end, monetary policy must touch the real economy, spur investments, and maintain monetary and financial stability. 7. i do, however, feel that the time has come to think out of the box, including by challenging the conventional wisdom. let me try and somewhat shock you with one such thought experiment. typically, modern central banks with interest rates as their main instrument move in baby steps – 25 basis points or multiples thereof – and announce a stance of tightening

money changers. stock exchanges and stock brokers are regulated by the sec. ibsl has the role of regulating the insurance industry. all these developments have necessitated more and more people who are skilled, knowledgeable and trained on financial services. as stated in the bestseller of robert kiyosaki, the reason as to why most of the poor and middle class people financially struggle, while the rich continue to remain rich for generations, is mainly because of the lack of financial intelligence and insight, as the real financial education is usually conveyed by parents to their children and not taught formally at schools. perhaps, this applies not only to individuals but to countries as well. may be, one of the reasons as to why we remain under - developed while developed countries progress faster, may be because of our shortage of human capital, with specific and adequate financial insights and awareness. if this situation is to be rectified, we need to develop well financially - educated people to operate financial institutions. we need well trained people to regulate these institutions. we need the investors to master the art of investment. all in all, we need our future generations to acquire sufficient financial knowledge. at the same time, i hope the knowledge that would be disseminated by this newly formed fsa would, also be valuable to change the attitudes of our financial journalists as well. in that regard, i hope that some of these courses may provide opportunities for our journalists too, to better understand financial service related subjects so that they will be able to provide a more meaningful interpretation of such matters. that too would, hopefully, enhance the general public ’ s understanding of financial operations and i look forward to such an outcome as well. as we all know there is today a vast majority of people who lack the knowledge to take advantage of the enormous opportunities that may be actually right in front of them. i think we have now taken the initiative to rectify that situation. the financial services academy, established today, jointly by the sec and the ibsl is a great move in that direction, and i hope that the fsa would grow to be a leading institution in financial education not only in sri lanka but also in the region.