Source: Average values by estimates of Chinn (1998), Goldstein (1998), Tornell (1998) and Berg and Pattillo (1998). BIS central bankers’ speeches  15  Chart 15 Current account balances in East Asia and the euro area East Asia (1996) – Euro area (1999)  Note: % of GDP. Source: Haver Analytics. Chart 16 Fiscal costs of recapitalisation as % of GDP  Note: high scenario. Source: IMF (1999). 16  BIS central bankers’ speeches  Chart 17 Argentina public sector debt as % of GDP  Share of foreign currency denominated debt in 2001: 97.59% Source: Haver Analytics. Chart 18 Exchange rates vis-à-vis the USD for selected emerging Asia countries  Note: 02/01/1997=100. Source: Federal Reserve Board of Governors. BIS central bankers’ speeches  17
Touching briefly on the stock market, equity trading in Iceland has risen very rapidly in recent years, as has the number of publicly listed companies and their total market capitalisation. Among other things, the depth of the market is increasing because of the incorporation and privatisation of public enterprises, including the banks. The laws and regulations pertaining to the stock market, including disclosure requirements, are similar to those in other European countries. The conduct of monetary policy Turning more specifically to the Central Bank of Iceland and the conduct of monetary policy, the current legislation stipulates many goals for the Bank. With the liberalisation of financial markets and the opening up of the capital account, as well as with international developments towards greater independence for central banks and simplified policy targets, the main target of the Central Bank of Iceland has gradually become that of maintaining a low rate of inflation. The Bank has also gained greater independence than is strictly provided for in the current law, which it has achieved with the tacit approval of the Government, but partly in agreements on specific aspects. In my view, this is important for enhancing the credibility of monetary policy and the Central Bank. Credibility is very fragile and it takes strong effort and careful policy and policy implementation to enhance and maintain it. Another objective of the Central Bank is to monitor the stability of the financial system.