banks in terms of interest costs and ready access to funding ; just as the banking problems have weighed on the sovereign. liquidity issues for the banks relate to the working out of the portfolio imbalances that had accumulated by 2008, specifically the very large loan - to - deposit ratio entailing borrowing abroad. much of this exposure to rollover and withdrawal risk has been transformed into a claim of the ecb. over time this block of legacy indebtedness will be run off, a process that could be assisted by sale of securitized parts of the portfolio. let me turn to the need to stem the deterioration in the government ’ s balance sheet and return it to a contained convergent path. much ink has been spilled on this matter in recent days and weeks and i do not need to provide much background. for the record, let me state that i strongly endorse the government ’ s decision to set out a multi - year budgetary plan. the need to announce and implement a clear and fully specified plan to bring the public finances onto a credibly convergent path of debt dynamics is of the utmost importance in order to restore domestic and international confidence and thereby unblock growth dynamics and restore access at reasonable cost to international capital markets. i also regard the parameters as being within the credible range and a good basis for rebuilding confidence. household and business balance sheets are also stressed. i have already referred to the over - indebtedness of some households, not least those affected by the increase in unemployment. working through these issues is something on which the central bank has specific responsibilities to ensure that distressed households are dealt with properly by the banks, and my colleague matthew elderfield, who has participated in the expert group on mortgage arrears has spoken on these matters recently. i don ’ t need to add anything to what he has said, except perhaps to emphasize and reiterate that, when i have used the word “ manageable ” in recent times, in relation to the costs of bank recapitalization, i have of course been referring to the overall fiscal program. it is an important message for me to transmit to investors drawing their attention to the fact that these costs are clearly not “ unmanageable ”. i have evidently not being referring to the consequences of the downturn and the fiscal measures already taken or contemplated on individual households : it would be more than impertinent for me to do so. finally, there is the question of the business

they were in the past, its fx liabilities may be relatively low, its banking sector may be solid, and its domestic capital markets may be deep and liquid. yet it ’ s domestic gdp growth performance has been weak, contributing to relatively high fiscal and current account deficits and a relative vulnerability of south african assets. consequently, emerging market policymakers should also focus on measures that increase the ability of domestic private agents to adjust to external shocks, including the mobility of labour and capital across sectors. these measures include lowering the page 9 of 10 constraints to doing business, creating opportunities for laid - off workers to ‘ retrain ’ and find jobs in alternative industries, ensuring that infrastructure is appropriate for business to respond to relative price shifts, and allowing for sufficient economic and export diversification. this way, heavy reliance on specific commodities, markets or segments of value chains will not become a major risk if those particular sectors face global shocks. conclusion in conclusion, let me again point out that while the global environment remains challenging for investors and policymakers alike, much progress has been made over the years to better insulate the emerging economies from unavoidable global shocks, and authorities have additional tools at their disposal to increase that resilience over the medium to long term. central banks can also play their part in the build - up of that resilience, both through the execution of their price and financial stability mandate, and through their management of official reserves – even though the current low - yield environment makes it difficult to earn good returns on their financial assets. but central banks also face limitations in what they can achieve. strengthening a country ’ s economic and financial architecture is everybody ’ s task. thank you. page 10 of 10