These innovations have allowed banks to reduce the capital charges for a given set of risks, making reported risk-based capital ratios increasingly less meaningful and the current standards progressively less effective.
The economy is expected to grow at a similar pace this year, with GNP growth of 5¼ per cent in 2005 (GDP 5½ per cent). A significant increase in employment of about 2¼ per cent is also expected. One of the challenges we face is to ensure continuing low inflation against this background of continuing strong economic performance.