Today the South African Reserve Bank (SARB) released the March 2008 edition of the Financial Stability Review. This edition focuses on the six months to December 2007 and is part of the SARB's approach to encourage debate on financial stability issues, and enhance the understanding of the financial system and its strengths and weaknesses.The global financial market turmoil caused by the United States sub-prime crisis features prominently in the Financial Stability Review. A sharp weakening in the US housing market and tight credit conditions have contributed to weaker economic growth in the United States and in most of the other major industrialised countries, especially during the last quarter of 2007. Expectations are that emerging-market economies could be affected negatively by the turmoil in global financial markets and the economic slowdown.  Africa is experiencing its highest, multifaceted economic growth in decades and the economic outlook for the Southern African Development Community region in particular, is expected to improve even further in 2008. Nevertheless, Africa still faces a number of downside risks that could impact negatively on financial stability. Based on an analysis of selected financial soundness indicators, the South African financial system was assessed as sound during the period under review. Overall confidence in the financial services sector remained high. The banking sector was well capitalised and profitable, with the capital-adequacy ratio in excess of the minimum required. Of note is the high annual growth rate, albeit from a low base, of non-performing loans, in particular mortgage loans. Credit growth to both the corporate and household sectors was still high. However, indications are that companies and households should still be able to service this debt, despite a slowdown in the growth rates of household financial assets, disposable income and net wealth.  Efforts to maintain and strengthen the resilience of the South African financial system remain a key focus area of the Financial Stability Review and a number of regulatory and infrastructural developments are highlighted in the publication. These include the implementation of the Co-operative Banks Act, 2007 that will pave the way for the introduction of co-operative banking in South Africa, and further consultation on proposed legislation, such as the Companies Bill, as well as the pension fund reform process. Ongoing developments in the supervision of financial entities and markets, in statistical data collection and in enhancing financial disclosure and governance, which contribute towards the overall resilience of the financial system, are also discussed.