new output. the pickup in productivity however tends to create even greater increases in aggregate demand than in potential aggregate supply. this occurs principally because a rise in structural productivity growth, not surprisingly, fosters higher expectations for long - term corporate earnings. these higher expectations, in turn, not only spur business investment but also increase stock prices and the market value of assets held by households, creating additional purchasing power for which no additional goods or services have yet been produced. historical evidence suggests that perhaps three to four cents out of every additional dollar of stock market wealth eventually is reflected in increased consumer purchases. the sharp rise in the amount of consumer outlays relative to disposable incomes in recent years, and the corresponding fall in the saving rate, is a reflection of this so - called wealth effect on household purchases. moreover, higher stock prices, by lowering the cost of equity capital, have helped to support the boom in capital spending. outlays prompted by capital gains in equities and homes in excess of increases in income, as best we can judge, have added about 1 percentage point to annual growth of gross domestic purchases, on average, over the past half - decade. the additional growth in spending of recent years that has accompanied these wealth gains, as well as other supporting influences on the economy, appears to have been met in equal measure by increased net imports and by goods and services produced by the net increase in newly hired workers over and above the normal growth of the workforce, including a substantial net inflow of workers from abroad. but these safety valves that have been supplying goods and services to meet the recent increments to purchasing power largely generated by capital gains cannot be expected to absorb indefinitely an excess of demand over supply. growing net imports and a widening current account deficit require ever - larger portfolio and direct foreign investments in the united states, an outcome that cannot continue without limit. imbalances in the labor markets perhaps may have even more serious implications for potential inflation pressures. while the pool of officially unemployed and those otherwise willing to work may continue to shrink, as it has persistently over the past seven years, there is an effective limit to new hiring, unless immigration is uncapped. at some point in the continuous reduction in the number of available workers willing to take jobs, short of the repeal of the law of supply and demand, wage increases must rise above even impressive gains in productivity. this would intensify inflationary pressures or squeeze profit margins, with either outcome capable of

matters of common interest. i am pleased to note that over the past few years, the region has taken a proactive stance towards promoting harmonisation of regulatory and supervisory frameworks and the integration of financial systems. through mefmi, sadc, comesa, the east african community ( eac ) and the west african bloc, member central banks are working together to promote effective supervisory standards geared towards achieving long term goals of financial inclusion and financial stability. bis central bankers ’ speeches ladies and gentlemen, i note with gratitude that this workshop is designed to address supervisory standards in the non - bank and microfinance sector through three main themes, namely ; i ) regulatory structures, ii ) international trends and standards, and iii ) integration of non - banks into the formal sector. these are all very important and topical issues and allow me to talk a little bit more about one of these themes – the development of regulatory structures. first, while there is a definite role for international standards for regulation of this sector, it is very important that they are implemented in a way that takes into account the individual circumstances of each country. secondly, the standards we adopt should in the end not impede financial sector inclusion. we need to balance this in order to achieve our overall objective which is a sound and efficient financial system. ladies and gentlemen, it is important not to assume that supervisory arrangements should be, or can be, the same in every country. they must be tailored to the individual circumstances of each country. as an example, what is appropriate for namibia may be totally inappropriate for another country like uganda, and vice versa. however, there are likely to be common characteristics that cut across and can enable us all to learn from each other. i do not wish to prescribe what you should talk about throughout this workshop, but i am hopeful that what i have mentioned above can form some discussion points in the deliberations of this workshop. it is also my desire that as you travel back to your respective countries, you would have learnt something you can implement to improve our respective financial systems. in conclusion, as financial markets become increasingly globalised, supervisory co - operation and harmonisation become increasingly important. organisations such as mefmi play an important role in developing capacity in the identified areas of macroeconomic and financial sector management. ladies and gentlemen, allow me to commend mefmi which has been in the fore front of building sustainable capacity in financial supervision in the sub - region. it has shown the cause