•  The choice of exchange rate regime is also an important factor in determining an economy’s vulnerability to short-term capital flows. We have seen the dangers associated with pegged exchange rates – including the tendency for pegged rates to become inconsistent with economic fundamentals, the risk of currency speculation and the costs of holding the peg in the face of sudden capital outflows.
*  *  *  We are today publishing the Central Bank’s 2010 Annual Report; and for the first time an Annual Performance Statement on our financial regulatory work. The latter is a new requirement under the Central Bank Reform Act of 2010.