in july, concerns on the financial markets regarding the crisis in the euro area had increased and the prospects for growth in sweden had thus deteriorated. there was considerable uncertainty over future developments. work was underway on resolving the problems in the euro area. but it was also clear that much remained to be done before sustainable solutions could be implemented. risks in the euro area – focus on greece and spain the concern on the financial markets stemmed of course from the public finance situation and problems in the banking sector in the euro area. concerns increased during the spring, mainly due to developments in greece and spain. the situation following the parliamentary election in greece in may fuelled speculations of an emu exit. after a new election in mid - june, the political parties that support the savings programme managed to form a new government. however, it was still uncertain whether the new government would be able to implement adequate measures. at the same time, spain continued to have problems with its public finances and yields on their government bonds rose. the problems in the spanish banking sector also became more acute. in june, the eurogroup promised to provide loans of up to eur 100 billion to enable the spanish banks to increase their capital adequacy, and the spanish government formally applied for bis central bankers ’ speeches assistance. increased concern over the situation in spain also meant that italy and the country ’ s large sovereign debt attracted greater attention. at the end of june, just before our monetary policy meeting, the european council decided on a number of measures to stabilise the situation in the euro area in the short term. the focus was on how the efsf funding programme and later the esm can be used. for instance, the possibility was created to use the mechanism to recapitalise a banking system directly, without burdening the country ’ s national debt. in this way, the link between the banks ’ and the country ’ s credit rating can be broken. when we met to decide on the repo rate on 3 july, it was uncertain what effect the measures would have and whether they were sufficient. crisis management but persisting concern personally, i found it difficult to evaluate the european council ’ s agreement and the other decisions taken during the spring to improve the situation in the euro area. as i noted at the monetary policy meeting, it is necessary to assess what is going on from both a short - term and a long - term perspective. in the short term, we need measures that will quickly lift the

##c, the south african reserve bank saw in this arrangement a great opportunity for closer co - operation amongst the central banks of the region. in the beginning, however, it proved a major task to get recognition from the political leaders for the need of an independent committee of governors of central banks. in many of the participating countries the central bank is regarded, and often unfortunately also used, as just an extension of the treasury department of the central government. in succeeding to get the approval for the establishment of this committee of governors an important seed was sown in each one of these there are a number of other protocols, co - ordinated by other countries, for example : inland fisheries ( malawi ), marine fisheries and resources ( namibia ), livestock production and animal disease control ( botswana ), environment and land management ( lesotho ), energy ( angola ), mining and labour and employment ( zambia ), tourism ( mauritius ), industry and trade ( tanzania ), food, agriculture and natural resources ( zimbabwe ), human resource development ( swaziland ), and culture and information as well as transport and communication ( mozambique ). countries for the acceptance of the undeniable advantages, also for the politicians, of an independent central bank. a second major obstacle was overcome when approval was granted for the establishment of a small specialised secretariat and research facility within the south african reserve bank to serve the committee of governors. this avoided the need for adhering to the cumbersome procedure of communicating within the central banking fraternity through the conduit of the sadc secretariat, based in gaborone, the capital of botswana. the sadc finance and investment sector was formally established only in 1995, and the committee of governors held its first meeting on 24 november 1995 in pretoria. now, eighteen months later, this committee can already look back on a number of accomplishments, and can report good progress with a number of projects being pursued in the interest of promoting economic development in the southern african region. a number of technical subcommittees and working groups have been formed, consisting mainly of officials of the sadc central banks, to work on specialised projects. 4. the basic philosophy behind financial co - operation in the region before the governors ’ committee was established, sadc approached financial co - operation in the region on the basis of proposals made by european advisers, and was based mainly on the model of financial integration in the european community. the folly of this approach was immediately grasped by the governors at their first meeting. the