credit ratings regime. this led to inflated credit ratings for many mortgage securitizations that subsequently performed poorly as mortgage delinquencies increased. there were significant problems in funding and derivative markets, including flaws in tri - party repo, money market mutual funds that were vulnerable to runs, and massive and opaque bilateral otc derivative exposures. finally, all of these problems were magnified by the lack of a good resolution process for large, complex financial firms that got into trouble. as a result, policymakers were forced to develop ad hoc interventions to contain contagion and to prevent the collapse of the u. s. financial system. we should never forget how close we came to a full - blown depression, and we must resolve to never allow a return to conditions like those that existed prior to the financial crisis. that said, it is entirely appropriate to take a critical look at the changes that were made to the regulatory regime. while we do not yet have evidence of how these reforms will hold up during the next economic downturn, many have been in place long enough that we can begin to evaluate their efficacy. in such an evaluation, we should keep in mind the three goals i mentioned in my introduction. first, we must ensure that the probability of failure for a systemically important firm is exceedingly low. such a failure can lead to contagion that can damage a broad set of financial market participants, and impede the ability of the financial system to support the economy. the failure of a single systemically important firm — because of its size and interconnectedness — can significantly weaken the entire financial system. we saw this firsthand following the failure of lehman brothers. second, if a systemically important firm does fail, we must have mechanisms in place to minimize the damage to the rest of the financial system. while we can make individual firms stronger, more robust and less prone to failure, i expect that there will still inevitably be failures in the future. in principle, we could make individual institutions completely bulletproof in all possible environments. however, this would require such high levels of capital and liquidity that it would likely make them uncompetitive in their ability to provide financial services to their customers. 2 / 6 bis central bankers'speeches third, we must keep in place the structural changes that have made the global financial system less vulnerable to adverse shocks. so, what does this imply when we consider revisions to the dodd - frank act and other aspects of reform?

bearing on the performance of the new issues. lastly, propose suitable debt instruments to diversify the range of securities available to investors and to deepen the financial markets as a way of entrenching financial stability. over the last decade, the market leaders forum has successfully achieved these objectives and continues to set bolder targets for the development of our bonds market. in partnership with various players in the financial system including the nairobi securities exchange, capital markets authority, the national treasury, kba, pension funds and stock brokers, we have managed to achieve the following : • establishment of benchmark bonds portfolio : through this partnership we have managed to defragment outstanding securities issues by creating liquidity around the selected benchmark tenors leading to development of a firm and reliable yield bis central bankers ’ speeches curve. benchmark bonds are currently available in maturities of 2, 5, 10, 15, 20, 25 and 30 years. • the pension sector reforms implemented over the last 10 years have supported the absorption of these bonds. • the kenyan capital market has gained from the benchmark bonds program in the following ways : – promoted price discovery for issuers of government securities as well as corporate instruments and investors. – reduced bond market fragmentation problem ( in terms of bond types, tenors, small volumes ) – stimulated robust secondary trading of bonds through increased liquidity around benchmark tenors. – provided reliable investment choices to investors. – lengthened the yield curve as benchmark for pricing other financial products. – facilitated development of other financial market facilities including infrastructure bonds which have been tapped to finance mortgage facilities and long term development projects. b. refinancing risk in domestic debt managed – the average maturity profile of government domestic debt rose from 8 months in 2001 to 7 years in august 2014. the ratio of t - bills to t - bonds evolved from a ratio of 4 : 1 in 2001 to 1 : 3 in august 2014. with a functioning secondary bond market in place, the government doesn ’ t face any significant rollover risks in its domestic debt. c. financing kenya ’ s development budget ; building on the success of the debut infrastructure bond issued in february 2009, the bank raised ksh. 32. 9bn in the fy 2009 / 10 and ksh. 30. 6bn in the fy 2010 / 11 through sale of infrastructure bonds to fund key infrastructure projects in the roads, energy and water sectors. d. market diversification : as a result of the success of the if