Speech by IAN PLENDERLEITH, Deputy Governor of the South African Reserve Bank 1. A good deal of attention has been directed in recent years to the very interesting and germane question of how far the challenges facing central banks in conducting monetary policy in emerging market economies differ from those facing their colleagues in developed countries. 2. Are the very evident differences, for example in economic and social structure, in the pace of change and in exposure to shifts in the global economy, so significant as to require a difference in approach to conducting monetary policy? If so, what are the material differences and what adjustments do they require policymakers to make, in focus or in process? In particular, can inflation targeting, which was adopted with such good effect by a vanguard of (mainly) developed countries in the early-1990s, deliver similar beneficial results for the larger phalanx of emerging market economies who followed suit in the late-1990s? 3. The purpose of this contribution is not to add to the burgeoning theoretical literature, but to offer some observations from practical experience of both worlds. 4. That experience needs some disclaimer at the outset. Thirty years of wrestling with British monetary policy at the Bank of England certainly does not entitle one to claim any extended track record of success, though the last ten years went a lot better than the previous 20. Equally, six months (so far) contributing to the conduct of monetary policy in South Africa is far too narrow a span to allow one to claim any first hand expertise in the distinctive circumstances of emerging market economies. But the privilege of serving successively on the Monetary Policy Committees of two such different countries is given to relatively few central bankers and it has been fascinating to try to assess whether monetary policy really is different in Africa. 5. What strikes one initially, in moving from a developed to an emerging market economy, is the remarkable similarity in the monetary policy process. This, on reflection, perhaps ought not to be surprising, given the effort the international community has invested in recent years in promulgating standards of international good practice for the conduct of macro-economic policy. 6. In terms of the structure of the policy framework, one obvious common feature is the critical importance of government establishing a disciplined and coherent framework for fiscal and monetary policy to work in mutual support, so that weakness in the public finances does not undermine monetary discipline and so that the commitment to low inflation is seen to be embedded as a key feature of the government’s overall economic strategy. Another common feature is the need for the central bank to be able to act independently in pursuing low inflation, and to have the technical expertise and professional competence to do its job and command public confidence. Yet another common feature is the need for the country to have a reasonably developed and competently-regulated financial system. In all these respects South Africa scores highly, as indeed international scrutiny through visiting IMF/World Bank missions has confirmed. 7. In process, too, the procedures through which monetary policy are conducted are remarkably similar. There are differences, but they are essentially ones of form, rather than substance.  8. Thus, as in other inflation-targeting countries, the inflation target is set as a key government economic objective. A structured Monetary Policy Committee in the central bank meets at regular, pre-announced intervals to take a considered decision on interest rates, enabling policy-makers to step aside from their day jobs for 36 hours and concentrate on a communal review of the monetary outlook. The emphasis, as elsewhere, is on a forward-looking assessment, weighing uncertainties and risks in the unknown future. Also, as elsewhere, the process is surrounded by lively public debate as to what monetary action should be taken, with market commentators showing commendable la