rapid a rate of appreciation of the singapore dollar can significantly hurt our economic performance, especially in light of heightened uncertainty in the external environment. in sum, exchange rate is taking longer than usual to moderate inflation, but it remains our broadest and most effective anti - inflation tool. mas will continue to keep a close watch on developments in the global economy and price pressures in the domestic economy. the next monetary policy statement will be released as scheduled in mid - october 2012. mas remains focused on anchoring inflation expectations as economy undergoes restructuring to reduce dependence on foreign labour looking at medium term, the domestic economic environment will remain challenging for monetary policy. the singapore economy is making a transition towards productivity - driven growth. this will help to reduce our reliance on foreign labour and raise the wages of low - income singaporeans. but rising wages must mean rising costs and rising prices, at bis central bankers ’ speeches least until productivity improvements kick in. we can expect stronger domestic price pressures over the next few years, and hence slightly higher inflation than we have seen historically. slightly higher inflation does not mean runaway inflation. mas will remain vigilant and calibrate monetary policy to ensure that this does not happen. we will not allow inflationary pressures to become entrenched or inflation expectations to build up. managing risks to economic and financial stability mas is preparing for risks to economic and financial stability posed by escalation of eurozone crisis besides watching growth and inflation trends, mas has been focusing on downside risks to singapore ’ s economic and financial stability. we monitor the risks closely, take steps to mitigate these risks where we can, and draw up contingency measures to manage them if they materialise. the key risk facing the singapore economy and financial system is the ongoing crisis in the eurozone. while eurozone governments have taken important steps to deal with crisis, we must be prepared for a more adverse turn of events. the escalation of the eurozone crisis can affect singapore in three ways : first, the impact on economic growth ; second, stresses on our financial markets ; and third, the safety and soundness of our financial institutions. let me begin with economic growth. a deeper recession and credit crunch in eurozone can impact our growth through trade and financial channels. the trade channel will be more direct and impactful. the eurozone is our largest export market, and singapore ’ s exports to the eurozone have been declining since q3 last year. for the financial channel, it will be

njuguna ndung ’ u : the role of banking and finance in regional integration address by prof njuguna ndung ’ u, governor of the central bank of kenya, at the banking and finance conference, nairobi, 18 august 2008. * * * chief executives of commercial banks here present ; john wanyela, executive director, kenya bankers association ; representatives of the east african business council and east african development bank ; conference facilitators ; distinguished guests ; ladies and gentlemen : i am delighted to be here this morning and let me hasten to thank the organisers of the conference for the invite. i am informed that the overarching theme of the conference is mainstreaming banking and finance issues in the integration process of the east african community. this is indeed a subject that is near and dear, not just to the central bank of kenya, but also to our counterparts in the region. i was therefore pleased to be advised that similar forums have already been held in uganda, rwanda and tanzania. i am further informed that a regional forum that will bring together all the east african key banking and finance players is scheduled for arusha in the course of next month. the role of banking and finance in regional integration cannot be overemphasised. at the most basic level, banks facilitate trade and flow of funds and investments across the region. however, with the global trends towards regional integration, banks will increasingly play a pivotal role in providing capital that will make this vision come true. i have in mind the move towards private - public partnerships in the financing and implementation of key regional infrastructure projects. we would like to see our banks playing an increased role in such initiatives. commercial banks must therefore facilitate long term financing projects. it would be apt at this juncture to commend the kenyan banking sector that is well represented here today for expanding its footprint across the east african region. regional banking is a relatively “ virgin ” service that should be encouraged. your institutions will, however, require to be well capitalised to take advantage of emerging regional opportunities. in this regard, raising capitalization in the commercial banks will facilitate flexibility and innovations in their market niche. i would also like to commend kenyan banks and the kenya bankers association for their efforts in the recent safaricom ipo. all the banks came out of it unscathed and this self discipline and focus is commendable. of course, the central bank had to walk the path with them. allow me to