brian wynter : economic issues and short - term trends for jamaica speech by mr brian wynter, governor of the bank of jamaica, at the quarterly press briefing, kingston, 15 february 2011. * * * ladies and gentlemen : welcome to this the release of the first quarterly monetary policy report for 2011. my presentation will follow the usual format. there will be a brief review of macroeconomic developments in the december 2010 quarter, followed by the bank ’ s view of the near - term prospects for the economy. in this report we have also included an article on inflation targeting, an alternative monetary policy framework that has become increasingly popular in recent years because of the success achieved in reducing inflation. this article comes in light of the success the government has had to date in its effort at fiscal consolidation and the commitment to a fiscal responsibility framework, which are important pillars of an inflation targeting framework. we encourage you to read the article and let us have your feedback. recent developments when we last met on 10 november 2010, i indicated that the process of transformation was continuing in line with the objective of lower volatility in domestic prices, lower interest rates and stable financial markets. the objectives set out in the financial programme continue to be met. to date, the government and the boj have met all the quantitative targets under stand - by arrangement ( “ sba ” ) with the international monetary fund ( “ imf ” ) and are set to meet those for end - december 2010. the reviews that the country has received from the imf have been encouraging and we continue to make progress on the structural benchmarks which are aimed at increasing efficiency in fiscal management and the financial system. in the context of these developments, the outlook for inflation remains favourable, interest rates continue to trend down, the foreign exchange market remain relatively stable and net international reserves continue to be robust. however, although there are signs of improvement in domestic output, the economy remains weak. money and financial markets on 15 november 2010, the bank reduced the interest rate on its 30 - day open market instrument by half of one per cent to 7. 5 per cent. on 01 february 2011 we reduced this rate by a further quarter of one per cent. these rate reductions were done in the context of continued weakness in the domestic economy and the favourable prospects for inflation. in addition, investors have continued to show a preference for jamaica dollar instruments, signifying their confidence in the positive near - term prospects for continuing stability in the economy. market - determined

with? what instruments does it trade? with this as our starting point, i shall take you on a brief journey back in time. what is a central bank? after the napoleonic wars, norway gained its independence following a five - hundred - year union with denmark. the country got its own constitution on 17 may 1814. according to the constitution, the norwegian parliament was “ to supervise the monetary affairs ”. when the major powers used force to implement the provision of the treaty of kiel uniting norway with sweden, the constitution needed to be adapted to the new realpolitik. however, the parliament managed to insert a new article in the november version of the constitution. it established an independent central bank, ensuring that norway would have its own independent monetary system. the actual norges bank act was not established until 1816. the first deposits were recorded in the books in 1817. at the time there were no functioning banks in norway. however, there was manufacturing, consumption, barter, investment and trade. there was also a rudimentary credit market and monetary system. commercial credit was available, savers met investors and bills of exchange were discounted. but these markets were rather inefficient : their margins were high, the supply of credit meagre and uncertainty high. most activities associated nowadays with a monetary system took place in the “ unregulated markets, ” to use the current term. accounts were kept, but not always in the numeraire we think of today. for example, this is described in the local history of karlsøy and helgøy, up in northern norway, where at that time accounts were sometimes kept in commodities such as cod liver oil, saithe or flour. however, one of these unregulated markets functioned even more poorly than the others, namely the long - term credit market. for that reason, norges bank ’ s initial activity was to enter this market. norges bank provided loans secured by real property. at its birth, the bank was, to use current terminology again, “ market maker of last resort ”. a private banking system gradually took shape. the first savings bank was founded in 1822 and the first commercial bank in 1848. in 1852 the first state mortgage bank was established. these developments allowed norges bank to withdraw from the mortgage market and concentrate instead on providing liquidity to the short - term money market. however, it was not until the 1860s that the bank ’ s predominant task was supplying short