It
is a great honour to be invited to deliver the third L.K. Jha Memorial Lecture
– especially to follow in such distinguished footsteps as those of Robin Leigh-Pemberton,
former Governor of the Bank of England, and Jacob Frenkel, Governor of the Bank
of Israel. Having served under both gentlemen at earlier stages of my professional
career, I will have to be particularly careful in what I say this evening!
Unlike
my two predecessors, I had the privilege of making L.K. Jha’s acquaintance, albeit
briefly, when I was a junior official at the IMF in the early 1970s. I had just
taken up the position of Personal Assistant to the Managing Director (then Piene-Paul
Schweitzer). One of the earliest visitors to his office that I had the pleasure
of meeting was L.K. Jha, Ambassador of India. The date was July 1972, and the
occasion was to issue an invitation to participate in a volume of tributes marking
modern India’s 25th anniversary as an independent state.
In
the nature of these things, I was asked by the Managing Director to supply a first
draft of the IMF’s contribution. So I got out to discover more about L.K. Jha
and the remarkable country whose ambassador he was. I discovered a man of penetrating
intelligence and deep conviction. He was a servant of India in the best sense
of the word. He understood the country’s traditions and he had a clear vision
of how to blend them with the demands of the modern world. He presented India’s
case, politically and economically, in war and peace, with skill and sensitivity.
And I know he transmitted the view of the outside world to Bombay and Delhi, with
equal sensitivity. It is an honour to pay tribute to his memory.
1972
was an occasion to reflect on India’s achievements during 25 years of independence.
The record was not without setbacks, of course, but was on balance strongly positive.
Nobody could fail to appreciate the magnitude of the social transformation that
the Indian Government and people were bringing about, while maintaining their
unique cultural traditions and democratic institutions.
Now, almost another quarter of a century later, economic and financial transformation
is being added to the list of achievement. L.K. Jha would probably not have foreseen
the developments of the past few years. But as a reformer and a pragmatist, he
would, I am sure, have applauded what you, Mr. Governor, and your colleagues in
the Reserve Bank and in the Government are doing. India has the good wishes of
all her many friends as she pursues the path of liberalisation and reform.
Economic
and financial transformation leads naturally into the subject of my lecture this
evening: the opportunities and challenges of innovation in capital markets.
I.
Introduction
The past twenty-five years have witnessed
a process of accelerating change in the world’s financial markets. Driven by an
interacting process of liberalisation and innovation, regulations have been removed,
new products have emerged and old boundaries between financial intermediaries
have been blurred. Innovation has brought many advantages. The menu of financial
assets and liabilities available to end-users has been greatly enlarged. The costs
of financial intermediation have fallen. Risk management tools have become increasingly
sophisticated. And developing countries have found new ways to mobilise domestic
and international savings.
At the same time, however, the
growth of capital markets has posed new challenges to economic and financial stability.
At the micro-economic level, individual institutions have become more vulnerable
to the consequences of misjudgements of misfortune. Systemic risk has grown as
institutions and markets have become more interdependent. And at the macro-economic
level, capital market liberalisation has been associated with continued, or even
increased instability in asset prices. The recent events surrounding the Mexican
peso and other emerging market currencies amply demonstrate the capacity of markets
to react sharply when confronted with unexpected changes in economic conditions.
Seizing the opportunities provided by capital market innovation, while avoiding
the risk of instability, is one of the greatest challenges facing central banks
and supervisory authorities in both the developed and developing world. It is
this that will be my theme this evening.
I will begin by
reviewing what has been driving financial innovation over the past two or three
decades, and what are the key features of the new financial landscape that is
emerging. Then I will look in more detail at the benefits that flow from a broadening
range of financial instruments, the greater availability of risk management products
and the growing geographical integration of capital markets.
After
that, I want to examine the challenges that the new environment presents to financial
and economic stability. What do governments and central banks need to do to ensure
that these challenges are met?
Finally, what does all this
mean for India? What lessons can be learned from the experience of others that
will enable you to benefit from the opportunities that new techniques offer, while
avoiding the all-too-real dangers of micro or macro-instability?
II.
The Process of Financial Innovation
Let me begin,
then, by reviewing some of the key developments in financial markets and the driving
forces behind them. Foremost among these driving forces has been deregulation.
Deregulation has sometimes been a conscious choice by the authorities and sometimes
a recognition that financial innovation has made existing regulations ineffective.
Some of the restrictions that have been removed have been domestic in character,
such as those that limited banks’ freedom to offer market clearing interest rates
on deposits or loans, or prevented different kinds of intermediary from competing
in each other’s traditional fields of business. Other restrictions have been external,
such as exchange controls designed to limit international flows of capital. Whatever
the nature of the initial restrictions, however, deregulation has enabled financial
institutions to compete more freely with each other and to broaden the range of
services they offer to customers, both domestic and international.
Another important influence on financial market developments has been uncertainty
– the growing awareness that interest rates and exchange rates can move in
unexpected ways that increase the risks associated with economic activity. The
1970s saw the break-down of the Bretton Woods exchange rate system and the beginning
of a period of floating exchange rates among the major industrial countries. The
1970s also saw the beginning of a period of fiscal indiscipline and high inflation
during which domestic interest rates became much more difficult to predict. As
a result, asset values became more volatile than they had been in the 1950s and
1960s. Individuals and commercial firms sought to protect themselves against the
consequence of volatile asset prices, and this spurred financial institutions
to develop products to meet the new demand to hedge risk.
Financial
innovation was also greatly assisted by the enormous increase in data-processing
power resulting from the computer revolution. This has had two effects. Firstly,
it has reduced the costs of financial transactions and made possible a large increase
in financial intermediation relative to final output. Secondly, it has spawned
the growth of products, especially derivative products, whose value would be impossible
to calculate on a continuous basis without advanced mathematical techniques and
the computing power to apply them.
Before finishing the
list of factors making for financial innovation, let me mention briefly globalisation
and securitisation. It is a truism to say that the world economy is becoming
increasingly integrated. More international trade and investment give rise to
the demand for cross-border financial services and access to international capital
markets. The emergence of banks and securities houses with global reach has further
tied markets together. Securitisation results from the trend to design financial
assets that can be made liquid, for example, through packaging loans and selling
them in markets. Securitisation has given rise to a need to manage the new assets
that are created, to price them on a continuous basis, and to trade them in response
to variations in their risk-return characteristics.
All
these trends that I have been describing have had the common effect of sensitising
financial intermediaries and end-users of financial services to the need to identify
and manage risk. It is now no exaggeration to say that leading institutions in
London and New York increasingly consider their central function to be not so
much managing assets as managing risks.
The
effect of these various forces on the size and nature of financial market activity
has been dramatic. Let me just give a few examples. The volume of foreign exchange
transactions undertaken in the major financial centres was estimated to be some
$900 billion a day at the time of the last BIS survey in April 1992. By now the
figure must be well in excess of a trillion dollars a day. The notional value
of outstanding contracts on derivative instruments is probably in the range of
15-20 trillion dollars (although their market value, which is a more relevant
figure, is much less than this). And the volume of cross-border securities transactions
has grown dramatically. For United States residents, it was the equivalent of
3 percent of GNP in 1970 and was around 100 percent in 1990.
These
are truly amazing numbers. It is clearly important to assess their implications
for the stability of domestic financial systems, and for the international economy
at large. Let me mention just one implication that is of particular significance
for a country such as India. It concerns the balance of payments. The growth of
international capital flows has had a major effect on the way in which balance-of-payments
constraints affect countries. Twenty years ago it was rare for developing countries
to receive capital inflows beyond long-term direct investment and aid receipts.
Now, the situation is quite different. Last year, for example, the current-account
deficit of Mexico was some 8 per cent of GNP, and some other countries had deficits
almost as large. Large capital inflows provide welcome resources for development
purposes. At the same time, however, they can add to inflationary pressures, and
pose obvious problems when an unexpected shock to confidence provokes their reversal.
III.
The Benefits of Capital Market Innovation
I will
come to some of these challenges later on, in my lecture. Firstly, however, I
want to take a moment to consider the benefits that flow from the integration
and sophistication of capital markets. These are of two kinds, macro-economic
and micro-economic.
At the macro-economic level, capital
market innovation enlarges the menu of assets available to savers and borrowers.
By designing savings vehicles in a more attractive way and extending the reach
of financial intermediation, saving is encouraged, and the utility of a given
volume of savings to the holders of financial assets in enhanced. Similarly on
the borrowing side: the introduction of new borrowing instruments facilitates
capital formation and, perhaps even more important, helps improve its quality.
If secure and liquid financial assets are readily available, yielding competitive
real rates of interest, savings are less likely to be retained by firms for low-productivity
investments, or diverted into inflation hedges.
Another
macro-economic benefit springs from closer international links among capital markets
and financial institutions. The integration of capital markets across borders
makes it easier for savings arising in mature economies to be used to finance
higher-yielding investment opportunities in economies with higher growth potential.
This promotes economic growth in two ways: by improving the efficiency of investment;
and by strengthening the discipline on governments and central banks to pursue
sound policies. (As I will discuss later, however, managing cross-border capital
flows presents challenges which can sometimes be difficult to meet.)
At
the micro-economic level, the development of new financial instruments improves
the capacity of financial intermediaries and end-users of financial markets to
manage risks. Better risk management, in turn, leads to the improved allocation
of resources, in particular capital.
Any discussion of risk
management leads directly to consideration of the role of derivatives. Derivatives
are, above all, a means of ';unbundling'; risks into various elemental
components, such as credit risk, interest rates risk, exchange rates risk and
so on. This enables the various risk components to be more clearly identified
and priced, and if necessary traded. Derivatives therefore facilitate the adjustment
of risk exposures for speculative or hedging purposes. This helps to redistribute
risks in the economic system to those most willing, and presumably most able,
to bear and manage them.
Derivatives can be tailored to
the particular risk management needs of customers. They thereby allow the creation
of pay-off characteristics – or heading possibilities – at a lower cost than would
result from the acquisition of underlying assets. This is particularly valuable
for those who manage large portfolios such as insurance companies and pension
funds, as well as for multinational companies that have streams of payments and
receipts subject to the multiple uncertainties of commodity price, exchange rate
and interest rate fluctuations.
Another benefit from derivatives
markets is the improvement they bring to the mechanism for pricing risks. By enabling
composite risks to be broken down into their elemental components, they improve
pricing efficiency, and thus the allocation of scarce capital that is needed to
cushion risk.
Lastly, derivatives facilitate investment
and arbitrage strategies that straddle market segments. They increase asset substitutability,
both domestically and internationally. This improves liquidity in individual markets
and, it is to be hoped, allows disturbances to be diffused, thus making the overall
system more resilient.
In all of these ways, capital market
innovations move us towards what are technically known as ';complete markets';.
In this way, they allow market participants to insure themselves against ';state
of the world'; that might adversely affect their business. This is a tremendous
advantage. All economic activity involves risk. But if we can allow business and
individual to focus on those risks they know and understand, while hedging those
risks that are incidental to their main business activity, then efficiency will
be improved and long-term investment will be more attractive. To take a simple
example: an oil company is more likely to undertake an investment if it can confine
its uncertainty to exploration and drilling risk, while buying protection against
exchange rate and interest rate risk from financial intermediaries. Financial
creativity can improve the risk-return frontier facing individual participants
in the real sector of the economy.
IV. Challenges Facing
Monetary Authorities
But there are costs to all
this creativity as well. As a series of events, from the global stock market crash
in 1987 to the Mexican peso crisis of the past few weeks have shown, the capacity
of capital markets to generate and propagate shocks has grown. Moreover, the risk
that ignorance or lack ofsophistication will enable individual players to run
up large losses before senior managers become aware of the situation has also
increased.
In the next part of my remarks, I want to distinguish
three kinds of challenges we face in assuring stability. These are micro-prudential,
macro-prudential and macro-economic. Let me explain in a little more detail what
I mean by these terms. Micro-prudential concerns are those related to the behaviour
of individual institutions. They arise from the increased risk that mismanagement
will lead to illiquidity or insolvency. Macro-prudential concerns are those related
to the propagation of disturbances through the financial system – systemic risk,
in other words. And macro-economic concerns are those related to the implications
of new instruments for the stability of national economies or the international
monetary system. I will deal with each of these challenges in turn.
Micro-prudential
risks have grown in size and complexity with the development of new financial
instruments, especially those that are actively traded and whose value can fluctuate
by a multiple of that of the underlying asset. In addition to credit (or counterparty)
risk, with which banks have long been familiar, other risks have now also assumed
major importance: market risk, liquidity risk, operational risk, legal risk and
so on. Moreover, many derivative instruments, such as options, have non-linear
properties that make it difficult to assess their vulnerability to changing market
conditions without using sophisticated mathematical tools.
Properly
used, these new and complex financial instruments enable risk to be effectively
and cheaply hedged. Misused, they can quickly lead to large losses. The answer,
in my view, does not lie in blanket restrictions, which would anyway be of limited
effectiveness. The defense against unpleasant surprises lies in ensuring that
individual institutions are adequately equipped to accept and manage the risks
that new instruments bring. This involves a particular focus in two areas; rigorous
internal controls, and an adequate capital cushion. It is the task of those responsible
for the health of the financial system to ensure that these requirements are met.
Internal controls involve such safeguards as: the close involvement of senior
management in the setting and monitoring of trading strategies; the separation,
within an individual institution, of the risk-taking from the risk monitoring
function; daily revaluation of portfolios on the basis of market prices; rigorous
monitoring of individual trades for compliance with position limits and other
controls, and periodic ';stress tests'; to verify that the institution
is resilient to large adverse shocks. These practices have been spelt out in greater
detail in papers prepared by international supervisory groups; such as the Basel
Committee on Banking Supervision and the International Organisation of Securities
Commissions (IOSCO). They have been accepted by financial institutions and national
supervisory authorities in the major financial centres, although more still needs
to be done to put them fully into effect. It is not too early for the responsible
authorities in emerging markets, such as India, to ensure that comparable practices
become the standard for their own financial institutions.
Even
when risks are well understood and controlled, losses will occur. This is natural.
In a competitive financial system, the discipline of loss should be allowed to
operate without calling into question the stability of the system at large. This
means ensuring that institutions are properly equipped to meet the losses that
arise in the course of their normal business.
Capital is
of course the ultimate defense against loss. Capital should be adequate to assure
counterparties that the institution concerned has the strength to weather even
extreme disturbances. Considerable effort has been expended by banking supervisors
in recent years to develop internationally comparable standards of capital requirements
against credit risk. These standards are now being extended to market risks, reflecting
bank’s greater involvement in trading, and the resultant vulnerability of their
portfolios to interest rate and market risk.
Bank supervisors
have the responsibility for ensuring that institutions they supervise have both
the capital and the internal control systems to meet the highest standards. They
also have an increasing responsibility to cooperate with other supervisors, whether
in different market segments or geographical areas, to ensure that ';gaps';
in supervision are not allowed to emerge, and to maintain a reasonably level competitive
playing-field.
I come now to the second challenge, which
concerns macro-prudential, or systemic risk. Systemic risk refers to the danger
that a failure in an individual institution will be propagated more widely, leading
to the severe impairment of one or more key functions of the financial system:
the allocation of credit, the pricing of assets, and the settlement of claims.
A given financial disturbance may grow into a systemic crisis at one point in
time but not another, depending on the financial and economic circumstances prevailing
when the shock occurs.
An important protection against the
propagation of systemic stress is to ensure that individual institutions are themselves
strong enough to withstand the failure of a counterparty. This will help to limit
contagion from an individual failure. Systemic risk can also arise from deficiencies
in clearing and settlement systems. The modernisation of these systems has often
lagged behind the development of new financial instruments. It is vital that weaknesses
in payment and settlement systems be dealt with speedily, and that other elements
of market structure, such as the legal environment, be clear and robust.
Last,
but by no means least, a major safeguard against systemic risk can be provided
by transparency. The growing interrelationships between markets, and the increased
complexity of many of the new instruments has made it more difficult to judge
from conventional balance-sheet presentations the risks that are being run by
market participants. If financial institutions were to disclose promptly and accurately
the nature of their portfolio, including some picture of their risk-management
strategy, prudential disciplines would be strengthened and counterparties will
be enabled to take more informed decisions.
The third type
of challenge is that presented by the macro-economic implications of financial
market innovation. Many recent examples show that greater freedom in capital markets
has not succeeded in limiting the volatility of asset prices. In the eyes of some
observers, it may even have increased it. As a result, some have wondered whether
greater mobility of capital has not rendered the task of stabilising the economy
more difficult.
Are these fears justified? And if so what can be done about
them?
In fact, it is far from clear that financial market
innovation has, on balance, had a destabilising effect on asset prices. A careful
study that was conducted under the aegis of the G-10 central banks and has just
been released, finds that in normal circumstances, the existence of derivative
markets adds to liquidity in the underlying cash markets and speeds up the process
by which prices adjust in the face of exogenous disturbances. The study finds
that the ability of monetary authorities to ';steer'; the economy is not
seriously impaired by the development of new instruments, even though there may
have been some changes in the transmission mechanism of monetary policy.
This
comforting conclusion needs to be qualified in two important respects, however.
Firstly, the influence of capital markets may not be so benign when there are
severe disturbances. In the extreme case, when all market participants want to
adjust their positions in the same direction, liquidity could dry up, and the
common pursuit of the same hedging strategy may produce extrapolative price movements.
Secondly, even without such disruptive influences, experience suggests the markets
have the capacity to over-react to news, both good and bad. In the recent case
of Mexico, it can be argued that market participants continued to extend loans
to Mexico even after the need for adjustment should have been apparent; and when
the needed policy action was eventually undertaken, the markets’ exaggerated response
made an orderly adjustment impossible.
What can be done
to minimise the possibility of macro-economic disturbances resulting from the
response of capital markets? I would suggest two broad approaches. Firstly, we
must recognise that the growing power of market forces increases the rewards of
consistent, stability-oriented policies. Correspondingly, it increases the potential
harm that will flow from unstable or unsustainable policies. Governments and international
organisations must continuously ask themselves whether the orientation of fiscal
and monetary polices, and the resultant value of the exchange rate, can be sustained
over time.
Secondly, we must work to ensure that the stabilising
properties of financial markets predominate over the destabilising ones. This
is more likely to be the case when markets are fully transparent, and market participants
have the necessary information to set prices on the basis of fundamental economic
forces, not simply in extrapolation of recent trends.
V.
The Relevance for India
I want to spend the last
part of my time this evening talking about the relevance of all this to India.
Doubtless, when seeing some of the difficulties created in derivatives markets
in Europe and North America, not to mention the crisis that has just affected
Mexico, you are tempted to say that capital market innovations are more trouble
than they are worth. That would be an understandable reaction but, in my view,
a mistaken one.
India is already gaining much by increased
integration in world financial markets, and Indian business and finance will benefit
greatly from applying the most up-to-date risk management techniques. The trick
is to do so in a way that avoids creating fragility in the domestic financial
system and that does not expose the economy to wide fluctuations in its access
to capital flows as a result of sudden swings in confidence.
It
would be presumptuous of me to offer detailed recommendations on these matters
to an audience such as this. But perhaps I may be allowed to make two sets of
general observations, based on the experience of other countries that have reformed
and liberalised their financial systems. The first set of observations concerns
the process of domestic deregulation, the second the management of external capital
flows.
As regards domestic financial deregulation, effective
supervision is of central importance. When markets are liberalised, new participants
are attracted who may lack experience and even, in some cases, respect for the
law. In the initial phases of reform, expected profits are often high, which attracts
even less qualified players, and induces supervisors and market participants alike
to lower their guard. Liberalisation often causes established institutions to
fear a loss of market share, which in turn leads to a relaxation of credit standards
and a reduction in lending spreads. When an external disturbance then occurs to
jolt confidence, the value of loan portfolios is revealed to be impaired, and
profitability to be inadequate. Something like this has happened in a number of
episodes of liberalisation, from Chile to Spain to the Nordic countries, not to
mention the savings and loan debacle in the United States.
To
prevent this sequence of events requires a supervisory authority that is prepared
to enforce rigorous standards with respect both to internal controls and capital
support. If a commercial bank or other financial institution cannot mobilise the
skilled personnel, the back-office support and the control systems to manage new
functions and a complex portfolio, then the supervisory authorities must be prepared
to say ';no'; irrespective of the apparent profitability of the business.
And whatever the calibre of management, they must insist that business expansion
follows adequate capitalisation and does not precede it.
Likewise with payment and settlement systems. These are the highways along which
the payments traffic moves. If they are inadequate to handle the (increasing)
traffic, then blockages and accidents are likely to arise. Bombay has had its
own problems with fraudulent operators. No system can be entirely proofed against
fraud. But the more robust the market infrastructure, the less the scope for fraud
of the kind from which Bombay has suffered. The upgrading and enlargement of clearing
and settlement systems has to be a central priority for any country contemplating
a major liberalisation in its capital markets.
Let me now
turn to my second set of observations, which concern macroeconomic stability.
Even if the underlying soundness of financial institutions and markets is safeguarded,
how can a country such as India protect itself from the risk that sudden fluctuations
in capital flows will undermine its strategy for controlling inflation and promoting
exchange rate stability? This is the question that has been thrown into sharp
relief by recent events in Mexico. A natural response, but one which I believe
would be mistaken, would be to raise further the barriers to inflows and outflows
of funds. It would be mistaken both because it would be ineffective and because,
in the end, it would be undesirable. Like it or not, world markets are becoming
integrated, and financial markets within each economy are becoming increasingly
sophisticated. A lesson which European countries have learned in the last decade
is that markets will eventually find a way round exchange controls. One will then
be left with the inefficiencies of regulation without the protection.
But
even if controls could be made watertight, it would not, I submit, be in India’s
interest to resort to them on a continuous basis. When capital is flowing in,
it is a mark of confidence in domestic economic policies and an opportunity to
enlarge the volume of real resources that the foreign sector provides for the
development effort. When capital flows reverse, it is a useful signal that the
sustainability of government policies is being questioned. This may be less pleasant,
but it is just as necessary for the timely adjustment of policy.
If
governments are to expose themselves to the rigours of capital market discipline,
how can they make sure that they get the benefits while minimising potential disruptive
consequences? Let me try to offer a few general guidelines.
First
and foremost is the need to follow macro-economic policies that are clearly directed
towards medium-term stability. This means that a budget deficit well within the
limit that can be financed on an ongoing basis, and a monetary policy that is
credibly directed to price stability. In both areas, industrial countries have
come to realise that the institutional setting of macro-economic policy, as well
as its conjunctural stance, is important.
Secondly, it is
important to take steps to raise the level of domestic savings on an ongoing basis.
This can be achieved both through structural measures favouring private saving,
and by fiscal action aimed at curbing public dissaving through the budget deficit.
A higher level of national saving reduces the need to rely on potentially volatile
sources of funding from abroad.
Thirdly, policy-makers must
carefully look at the sustainability of policy outcomes. Over valuation of the
exchange rate, as evinced by a large current-account deficit, is a danger signal,
regardless of whether the rate is determined by government action or market forces.
The danger signal requires particular attention if the current-account deficit
is not the counterpart of high domestic capital formation and if it is financed
by short-term borrowing.
Fourthly, a prudent attitude should
be taken towards capital inflows. I said a moment ago that it was neither possible
nor desirable to restrict tightly capital flows. But liberalisation should nevertheless
be undertaken in a careful and prudent manner. There is certainly no need, and
indeed considerable risk, in artificially stimulating capital inflows by providing
special incentives of creating new vehicles for the public sector to borrow abroad.
Fifthly
and last, it is very important to maintain a ';cushion'; of usable foreign
exchange reserves as a protection against unexpected developments or changing
sentiment. Reserves should not be thought of as a means of delaying or avoiding
adjustment, but as a way to enable timely policy adjustments to take effect over
time, without requiring disorderly changes in real economic conditions.
I
can well imagine that by now inquisitive journalists are asking themselves how
I would grade India against these standards. If they are of a mischievous turn
of mind, they may hope that I will fund points of criticism that will make newsworthy
copy !
In fact, I will have to disappoint our friends from
the fourth estate in this respect. The record of the Reserve Bank is a very good
one. The prudent management of the financial system, together with the ongoing
reform programme has contributed to growing confidence and a strengthening of
capital inflows although this has fuelled monetary growth. Meanwhile, the current-account
deficit has remained within manageable bounds, and the authorities’ commitment
to monetary stability and fiscal restraint has been renewed following the budgetary
slippage of last year. The reserve position is strong, giving cause for confidence
that India can weather whatever turbulence lies ahead.
Mr.
Governor, you would not expect a fellow central banker to end without a note of
caution. The world is a dangerous place, especially for those concerned with monetary
management in a developing country. The challenges posed by financial liberalisation
are difficult and complex. India’s progress has been good, but I know you would
like it to be even better. It behoves all of us, in national and international
organisations alike, to be constantly vigilant against the many threats to stability
that beset the world economy.
With good judgment, firm resolve, and co-operative
efforts, I am confident that the opportunities can be seized and the challenges
overcome.