bank of uganda keynote address read by mr. elliot mwebya, acting deputy governor, bank of uganda, to the national payment systems bill stakeholder consultative workshop golf course hotel october 1, 2018 the ps / st, mofped, officials from the eac secretariat, representatives from the mofped, other government agencies, supervised financial institutions [ sfis ], the mobile network operators ( mnos ) and payment system providers ( psps ), the chief executive ’ s and representatives from the partner regulatory authorities ( ucc, cma, use, ira, umra to mention but a few ), the ed uganda bankers association, all stakeholders present in your respective capacities, ladies and gentlemen. it is a great pleasure to welcome you all to this very important stakeholder consultation event on the long awaited national payment systems law. as we have explained in the past, both the bank of uganda act 2000 and the financial institution act 2004 have limitations on the regulation and supervision of payment systems in uganda. section 4 of the bank of uganda act which stipulates the mandate of bank of uganda is silent on the regulation and supervision of payment systems. similarly the provisions in the financial institutions act 2004 pose limitations on the regulation and supervision of payment systems since the act applies to deposit - taking institutions only. recognizing the benefits accruing from the recent technological developments in the financial sector, and being mindful of the need not to stifle innovations, bank of uganda put in place interim oversight measures to promote the development of payment systems in uganda. these measures were benched - marked with the regional central banks and included : the issuance of no objection letters to some commercial banks to partner with the telecommunication companies to provide mobile money services since 2009. issuance of mobile money guidelines in 2013. setting up of a technical working group constituted by technical staff from bank of uganda and the uganda communications commission. signing of the memorandum of understanding between the two regulatory authorities ( bou and ucc ), in 2016 to clarify the respective roles and responsibilities. however, we have now made a significant progress towards the development of the legal framework for the regulation of payment systems in uganda. cabinet in december 2017 approved the policy and principles for national payment systems bill which covers ; the regulation of payment systems, payment service providers and payment instruments. following approval by cabinet, the ministry of finance planning and economic development requested the office of the attorney general to draft the bill. before us today is the first draft of the nps bill

ensuring their timely correction. the so - called “ six - pack ” reinforces the preventative arm of the stability and growth pact and introduces a debt trigger for the excessive deficit procedure whereas in the past the trigger was confined to a fiscal deficit above 3 per cent of gdp. additionally, it includes the macroeconomic imbalances procedure under which a variety of indicators of such imbalances can be monitored. under the fiscal compact, member states that have signed the compact are required to limit structural deficits – that is, general government deficits over the cycle – to 0. 5 per cent of gdp. finally, the so - called “ two - pack ” gives strong powers to the commission to intervene directly in budgetary plans before they are approved by the national parliaments. these new supranational tools will go a long way enguarding against the build - up of large imbalances of the kind that were present before the crisis. other areas of intervention comprised the macroprudential oversight and the establishment of financial backstops : the european systemic risk board was established in 2011 to exercise macroprudential oversight of the eu - wide financial system. the efsf was established as a temporary financial backstop in 2011, while its successor, the esm provides a permanent facility for responding to new requests for financial assistance by euro - area member states. however, the most ground - breaking reform of the eu ’ s architecture as a result of the crisis has undoubtedly been the banking union. as i mentioned, the crisis has exposed the weakness of a monetary union not accompanied by a banking union. in the early years of monetary union, considerable progress was made in integrating the various domestic – nationally - oriented – markets. in recent years, that progress has been reversed ; there has been a marked retreat into nationally - based banking and financial systems. this retreat has led to a fragmentation of financial markets, contributing to the breakdown of the monetary transmission mechanism. to deal with that fragmentation, efforts bis central bankers ’ speeches are well underway to build a banking union. as the crisis was characterized by negative feedback loops between banks and the state, the banking union will help maintain financial stability. in greece, where the crisis was sovereign - induced, the subsequent rise in sovereign spreads severely challenged banks ’ capital adequacy. greek banks ’ capital was effectively wiped out after the haircut on greek bonds. recapitalization of banks was only possible through the introduction of the backstop of the