this has been most evident by the number of mergers and acquisitions and privatisation involving regional companies within the past two years. meanwhile our integration into the international capital markets system at the level of government issues is progressing steadily, but is constrained by the small size of issues. again, macroeconomic stability must take precedence over market impact and our desire for integration into the global market. internationally, there has been a wide level of disintermediation and an increase in non - bank competition in the financial markets worldwide. indeed, in many regional jurisdictions - less so in barbados and more so in trinidad and jamaica firms can satisfy their needs by obtaining funding through the capital markets directly. this should not be seen as a circumvention of the banking system. it is quite normal in the development of financial systems. markets evolve in different ways as economic and financial environments lead participants to seek alternative credit intermediary channels. capital markets are to be seen as complementary to traditional financial intermediaries, and should therefore not be viewed as a substitutes for a well - functioning banking system. while there is evidence of disintermediation in some caribbean counties, capital markets cannot substitute for banks as capital markets are sometimes better positioned to provide longer term financing and sometimes higher risk financing than banks. typically, firms in the region have been generally reluctant to expand their funding sources, seemingly for fear of weakening of their relationship with banks. however, it is important for firms to feel free to select what they judge as the most advantageous way to obtain funding in order to ensure a smooth system of corporate financing. as markets become deeper banks themselves will tend to seek to securitise existing loan assets and to provide advisory and underwriting services for the issue of securities. this has been the trend elsewhere, where bank securitisation has become quite normal. securitisation has its advantages as it allows comparatively riskier firms to access to capital markets, and it lowers financing costs by segregating higher quality receivables or assets from the risky firms. properly used, in conjunction with derivatives, it can facilitate the transfer of risks of commodities, foreign exchange and interest rates, to investors willing to accept these risks for a fee or profit. conditions necessary for the development of capital markets institutional infrastructure one of the factors which is most important in the deepening of capital markets is the institutional infrastructure - that is, the legal, taxation, and accounting systems. while, for the most part accounting systems are reasonably

the central bank. one of the features of modern central banking is gradual homogenisation of the strategies applied to the monetary policy. since 1990, when for the first time the central bank of new zealand started to implement the strategy of direct inflation targeting ( dit ), over 20 central banks followed and adopted that strategy. as a result, the dit strategy ( applied since 1998 by the nbp ) is now the dominating strategy of the monetary policy, applied by the majority of central banks in developed countries 22, and more and more, by central banks of the developing countries ( such as turkey, the philippines, ghana, romania and armenia ). a bloom of the dit strategy endorses the observation that central banks adopt the “ technology ” of low and stable inflation from one another. the dissemination of the dit strategy was accompanied by a decrease in the average inflation level, especially in the developing countries that lowered inflation from a high level. this may prove that the dissemination of the dit strategy was one of the factors that have contributed to disinflation. admittedly, the impact of the dit strategy on lowering inflation is a subject matter of discussion 23 ; however, empirical evidence exists that implementation of the dit strategy improves macroeconomic this is even called the greenspan ’ s conundrum, after the name of the former chairman of the us federal reserve. fomc ( federal open market committee ) : the decision - making authority on interest rates in the management board of the us federal reserve. hannoun h. – ibidem. tytell i., wei s - j. “ does financial globalization induce better macroeconomic policies? ”, imf working paper 04 / 84, may 2004. the dit strategy is applied in most developed countries outside the euro area and the usa. however, in the case of the euro area, one may talk of the de facto dit strategy, and in the case of the usa – the current chairman, fed ben bernanke, is a zealous dit enthusiast, so its implementation in the usa soon is not out of question. see e. g. “ does inflation targeting matter? ” ball l., sheridan n. in : ” the inflation - targeting debate ” bernanke b. s., woodford m. ( 2005 ). outcomes ( lower costs of stabilising inflation, decreased influence of price shocks and output shocks on inflation, thereby - decreased effect of past inflation