Firms and consumers have gained some breathing space, and their sentiment has been improving. Production has stopped decreasing as exports have bottomed out. Of course, although the European debt problem has yet to be fully resolved and the consequences continue to warrant attention, the European economy is likely to pick up gradually as recent developments continue.
Although Basel III is envisioned to increase the resilience of the banking system and in so doing, improve the effectiveness of the monetary policy transmission mechanism, and South Africa as a member of the G20, the Basel Committee for Banking Supervision and the FSB in principle supports these regulatory reforms, there are nonetheless risks of unintended consequences associated with the implementation of these requirements.