the result has been a rise in net savings in the oil exporting countries. the two surplus regions have one thing in common. in both cases, foreign assets are accumulated almost entirely by the official sector. in the oil exporting countries, oil revenues primarily accrue to governments. higher oil revenues therefore translate into higher government budget surpluses. in south east asia, where the currencies shadow the dollar, foreign assets are accumulated primarily by the central banks in the form of official foreign exchange reserve accumulation. slide 5 shows that the global macroeconomic imbalances have led to a rapid accumulation of global official foreign exchange reserves. 3 let me now leave you with five stylized facts about swfs. first, as i already pointed out, swfs are not a new phenomenon. with its caisse des depots et consignations, france set up a swf in 1816. 4 slide 6 shows the year of establishment of each of the 14 largest swfs currently in operation. the kuwait investment authority was established in 1953. since then, swfs have been set up essentially in two waves. the first one occurred in the second half of the 1970s. the second wave began in 1996 with the setting up of norway ’ s government pension fund – global. the steep increase in oil prices since 2000, the widening of global imbalances and the resulting accumulation of foreign exchange reserves suggest that other countries will follow suit. by applying a simple rule to identify which countries potentially hold excess reserves, we can readily identify the countries that are obvious candidates for future swfs. slide 7 shows a list of countries that meet the following two conditions. 5 they have no swf at present and, judging by the greenspanguidotti rule, they hold excess reserves of at least usd ten billion. 6 note that according to snb staff calculations, the us current account deficit currently absorbs about 60 percent of the world's aggregate current account surpluses. the remaining deficits are located largely in a handful of eu countries ( spain, italy, greece, france and the uk, 30 percent ), in central and eastern europe ( 8 percent ). the final 2 percent originate in developing countries. the exception is china, which has attracted even more investments since the asian crisis, while savings have also increased faster. see, for example, genberg et. al. ( 2005 ). in some countries, the reserve accumulation has been further magnified by private capital inflows. i am grateful to

central bank transparency then allows markets to better anticipate the future path of short - term rates, the effect of this path on other financial market prices and ultimately the impact on the real economy. the monetary policy transmission process is thus rendered more efficient. transparency has a second advantage : it reduces uncertainty and may therefore lead to lower volatility in various financial markets. if markets can better anticipate the behaviour of a central bank and the effects of monetary policy, there should be less scope for monetary policy surprises, better anchored inflation expectations, less monetary policy - induced volatility in asset prices and ultimately less macroeconomic volatility. less volatility should translate into a lower risk premium and may thus promote investment and positively affect economic growth. lower risk premiums also lead to higher asset prices. indeed, throughout the world and for most asset classes, there seems to be a trend in recent years to higher valuations. these higher valuations can probably partly be attributed to the reduction of the risk premium due to lower expected volatility. to the extent that market participants correctly gauge a reduction in the risk premium, higher asset valuations can be expected to endure and represent lasting wealth creation. there is a third reason why central bank transparency has become pertinent. with the world's capital stock growing faster than the world's economies, real effects attributable to asset prices are becoming more important. 4 on the one hand, this is good news, as it creates wealth and strengthens the transmission process of monetary policy. on the other hand, a sudden increase in asset price volatility could have more adverse consequences for the real economy than what we might infer from past experience. if that is so, central banks clearly have an incentive to avoid becoming the source of unnecessary asset price volatility. the growing importance of balance sheet considerations in monetary policy only reinforces the importance of transparency in central bank communication. 5 finally, let me make an obvious but nonetheless crucial point, even if it goes beyond today ’ s topic. transparency is a valuable good in its own right. for good reasons, central banks are powerful and for the most part politically independent institutions. moreover, the officials who run central banks are typically appointed for lengthy terms and are difficult to remove from their positions. transparency is a crucial element in creating democratic legitimacy for politically independent institutions whose actions can have wide - ranging consequences for a country ’ s citizens and its elected government. as former fed chairman alan greens