The past year has witnessed the most severe global economic downturn since the 1930s. At the time of the previous annual general meeting, the impact of the financial market crisis was becoming evident in various economies. However, at that stage theextent and depth of the global recession were still to be realised. In response to the slowdown, central banks and governments around the world have taken unprecedented and unconventional steps to protect their banking systems and economies. In South Africa the well-regulated banking system was relatively insulated from the fallout. However, the globalised nature of the downturn meant that the domestic economy was not spared, and the resulting domestic recession required appropriate fiscal and monetary policy responses.These developments posed a new challenge to monetary policy and resulted in a renewed focus on matters of financial stability. Appropriate supervision and regulation of the domestic banking sector and payment system have ensured an orderly financialmarket environment. Although inflation was outside the target range, the stance of monetary policy was loosened significantly in the face of an expected moderation in inflation and a weakening economy. Nevertheless, some upside risks to the inflation outlook remained and this constrained the monetary policy response somewhat. Apart from these concerns, the South African Reserve Bank (the Bank) also focused on maintaining and improving its internal operations.A comprehensive economic report, which is included as part of the Annual Report 2008/09, provides an analysis of developments in the domestic and international economy during the year under review. Particular emphasis is placed on those developments that have had implications for the operations of the Bank. As is usually the case, the focus of this address is on the main operational areas of the Bank.​