The process of capital reallocation across the economy has been assisted by a significant unbundling of risks in capital markets made possible by the development of innovative financial products, many of which themselves owe their viability to advances in IT. Before this revolution in information availability, most twentieth-century business decisionmaking had been hampered by wide uncertainty.
The Bank will continue with its strategy of accumulating reserves when market conditions are favourable. However, further accumulation is expected to be constrained by the volatility in the foreignexchange markets, the level of global risk aversion and the cost of sterilisation. Managing the foreign-exchange reserves poses considerable challenges, particularly in the current uncertain global financial market conditions.