: the crisis has led the g20 leaders to commit to changing the rules for over - the - counter derivatives markets, with a view to strengthening their security and transparency. first, strengthening security : all sufficiently standardized derivatives should be subject to mandatory clearing through a central counterparty in order to reduce counterparty risk and foster market liquidity. second, on transparency, the aim is a registration of all transactions with trade repositories to provide authorities with a consolidated overview of derivatives trading. the contributions to the fsr show that most commitments have been materialized in a regulatory framework that is currently being finalized : in particular, at the international level, in april 2012 the cpss ( committee on payment and settlement systems ) and the iosco ( international organization of securities commissions ) published the “ principles for financial market infrastructures ” that update, strengthen and broaden the former standards applicable in the different jurisdictions. bis central bankers ’ speeches i will pay a particular tribute to the leadership of the us lawmakers in this field of regulation and the personal action and involvement of senator dodd, with the law named after him and his colleague senator frank. european union legislation with emir ( european market infrastructures regulation ) has also marked a decisive step to address the need for further security and transparency on otc derivatives markets. but the contributions to the financial stability review, also show that reforms must be pursued. before we get to the discussion, let me briefly give you some personal thoughts on this. efforts in the reforms should tend to establish a comprehensive, adequately calibrated and consistent regulatory framework. 1. there is a need for a comprehensive framework. this means that we have to extend and complete security and transparency. • first, pay a close attention to the regulation of otc derivatives that will remain noncleared. • second, pay a close attention to the implementation of pfmis and different regulations to ensure that ccps maintain state of the art risk management practices ( margining, collateral, default funds ) and adequate governance both for the sake of both their own soundness and the resiliency of the markets they serve. • third, define appropriate principles for resolution and recovery of financial market infrastructures, and particularly ccps which now concentrate a high level of risks. • last, bring transparency in the area of secured and unsecured interbank lending, which are the underlying reference for interest rate derivatives. monetary policy considerations also call further transparency in that regard as it requires detailed knowledge of the organization of money market

central bank policy. each inflation forecast is projected two years ahead, quarter by quarter. as in all countries, changes in the central bank interest rate are transmitted to the economy with a considerable lag. monetary policy therefore needs to be forward - looking and the inflation forecast based on the best available methodologies. if the scenario is that inflation will head beyond the bank ’ s target, the bank will raise its interest rates, while it will reduce them if inflation is tending below the target. let us first look at the macroeconomic forecast, which of course is a major consideration for future inflation. the main assumptions are that the central bank ’ s policy interest rate, currently 5. 3 %, will remain unchanged for the forecast period, which is a standard forecasting assumption, and that the exchange rate will be 3 % weaker than in the february forecast, with a reference value of 124. however the exchange rate index has continued to rise [ i. e. the krona weakens ] and currently stands at 128. another assumption is that fiscal policy will not deliver a stronger demand impulse than has already been decided. in other words, the fiscal stance will be relatively neutral, apart from a considerable increase in public sector investment this year and a contraction next year. this implies that the treasury balance will not be disrupted by discretionary measures on the expenditure and revenue side. public consumption is expected to be below the historical average. on the basis of current assumptions for the development of external conditions this year and in 2004, prices of marine products are now expected to fall by 4 % this year and to remain unchanged between 2003 and 2004. exports of marine products are expected to grow by 3 % this year due to increased quotas for the fishing year [ beginning september 1 ] and a larger blue whiting harvest this summer. the assumed increase in catch volume for 2004 is 5 %. aluminium prices are expected to rise by 4 % this year, based on futures prices and the pricing assumptions of the two aluminium companies, norðural and alcan iceland. import prices in foreign currency are expected to decrease by ½ %. fuel prices are based on futures. these have been on an upward trend in recent weeks and are now expected to rise by 9 % this year but fall by 14 % in 2004. the terms of trade for goods and services are expected to deteriorate by 1½ percentage points this year. in 2004 they are expected to improve by three - quarters of a percentage point. assumptions for short - term