Keynote Address by Dr Chris Stals, Governor of the South African Reserve Bank, at the Fifth Annual African Regional Conference of the Society for Worldwide Interbank Financial Telecommunication (SWIFT) Cape Town.   1. The global financial environmentThe ongoing process of economic globalisation is creating a more complex environment for the smaller and less-developed economies of the world. The integration of financial markets, the multilateralisation of financial and other corporates, and the liberalisation of trade and services contribute to more competitive global circumstances. It becomes more difficult for small and economically less-developed countries to find a foothold in this complex and highly competitive environment, to keep pace with the technological revolution, to introduce fast-changing high-cost electronic and satellite communication systems, and to switch to sophisticated new production processes.The smaller countries with less-developed economies are, however, in most instances very dependent on the rest of the world for the support of their economic development programmes. In particular, they need transfers of surplus savings from the more developed economies to supplement their own scarce resources. They need assistance in the form of technology, skills and experience. They need markets where they can sell their minerals and other raw materials, and the manufactured goods that they can produce on a competitive basis in their own countries. In other words, they can not for ever live in isolation from the unstoppable process of economic globalisation.For understandable reasons, the rules for participation in the economic globalisation process are made mainly by the industrial countries. These countries, after all, are the major players in this game. The rules, however, do not always fit conditions in, and aspirations of, the smaller countries. Governments in some of these smaller countries are therefore often frustrated by the harsh conditions for macroeconomic management set by the international investment community, and by the severe penalties for not abiding by the rules. Clear signs of such frustration recently came from countries in East Asia that apparently managed their economies with great success for many years, but failed to satisfy the standards for macroeconomic management demanded by global financial markets.South Africa is a country that still struggles with the development of its internal economy, and with the task of creating sufficient jobs for the continuous growth in its total labour force. At the same time, South Africa has a very well-developed financial sector with financial markets that are rapidly being integrated into the global system. This country cannot afford to ignore the massive needs of its own people, but can also not disregard the minimum standards for macroeconomic management laid down by the international investor community.In the short term, there may seem to be conflicts in the two objectives: can the international demands for prudent economic management be reconciled with the urgent national demand for more jobs, and immediate economic development? It is true that, in the longer term, both objectives will be served best by applying the economic disciplines demanded by the global financial markets. It is, however, difficult to explain to people already living in poverty that things must get worse before they will get better.It is also difficult for the smaller countries with less-developed economies to change the philosophy of, or to alter the models for, macroeconomic management already accepted by the global markets and firmly established as preconditions for full participation. For the time being, the only sensible approach for the smaller countries is to try to understand these minimum requirements better, and to decide what they can do on a case-by-case basis to implement suitable policies. At the same time, they must continue to negotiate on a multinational basis, for a better understanding of the political and social implications for the smaller countries of