, and interest rate sensitivity ( camels ) approach to a more risk - based approach. a risk - based supervisory approach would involve the identification of key risks, the level of these risks and the key risk areas. after identifying these risk factors, a comprehensive supervisory framework with appropriate resources is then assembled to mitigate the risks. the amount of resources required is dependent on the level and intensity of the perceived risk. however, suffice to mention that this does not mean that the risk - based supervisory approach ignores the strengths of the camels approach, but rather addresses the weaknesses by putting more emphasis and resources on areas with potentially higher risk. ladies and gentlemen as many of us are aware, financial sector operations have become complex nowadays, as they entail, among others, managing financial, market and operational risks, which depend, to a large extent, on public confidence in the financial system. in this regard, proper supervision is critical to minimising risks as well as ensuring the stability of the financial sector and engendering public confidence. this justifies the need for effective regulation and supervision of the operations of banks and non - bank financial institutions compared to other business operations. further, with the increase in non - bank financial institutions, their level of risk has also risen. accordingly, the sheer size of the sector is of systemic importance, hence, effective and efficient regulation and supervision is required to stem any systemic risks. ladies and gentlemen i am happy to note that this workshop is addressing, in greater details, issues relating to the regulation and supervision of the non - bank financial sector, so as to ensure that the financial sector is safe, secure and efficient. as i conclude therefore, i wish to urge the workshop participants to participate actively in the deliberations and use this opportunity to tap from the vast experience of the resource persons. i have every reason to believe that this workshop will provide you with the opportunity to share experiences and enhance your knowledge of issues pertaining to regulation and supervision of the non - bank financial sector. with these remarks, ladies and gentlemen, it is now my honour and privilege to declare this regional workshop officially open. i thank you.

stability monetary stability is the greatest achievement of emu. by monetary stability, i mean the absence of tensions on the money and currency markets. these tensions diminished and practically disappeared on the road to emu. the launch of emu then made such tensions impossible between the participating countries. but emu has also contributed to monetary stability in non - participating countries. many of these countries have the objective to join emu and are therefore committed to conducting stability - oriented policies to make participation possible at a later date. emu has contributed to the monetary stability of floating exchange countries as well. this is because these countries have also conducted stability - oriented policies aiming at low inflation and sound government finances. two forces have contributed to this effect. firstly, there is a size effect. smaller neighbours have an incentive to conduct stability - oriented policies as long as they have a large neighbour with predictable monetary policy aiming at low and stable inflation. deviation from such a policy would hurt the smaller neighbours, not the large currency area. the cost would be higher risk premia and higher real interest rates. we only have to recall that in the 1970s and 1980s germany had lower real interest rates than its neighbours, which were less successful in maintaining monetary stability. secondly, there is a political - economy argument. the existence of a large area of monetary stability makes it easier, or at least less difficult, for the political leaders of smaller neighbours to resist in situations where special interest groups are calling for more inflationary policies. they might sometimes think that they suffer from too high interest rates or too strong an exchange rate. the risk of time inconsistency is thereby reduced. european history has witnessed repeated episodes of monetary instability. typically, the instability has been caused by an economic slowdown or recession. this was the case at the beginning of the 1980s and the 1990s, as well as in the mid - 1970s. the ultimate trigger for instability was the different policy reactions to the shocks that occurred at these times. europe is now going through a challenging period. economic activity is weakening due to higher commodity prices, which dampen consumption and investment, and also due to the uncertainty the recent financial market turbulence is causing for the growth outlook. had emu not been a reality, we would probably now be experiencing a similar, or even worse, monetary mess than europe experienced at the beginning of the 1990s. price stability monetary stability and price stability are inseparable. we cannot have monetary stability without price stability. price stability, in turn, is a