##quification will of course take time – but there are signs that it is under way, especially in the relatively strong growth in the market for continental high technology stocks. what about the traditional banking market? i leave this to last because some of the likely changes are just the counterpart of factors i have already mentioned. but for instance, greater reliance by capital users on equity as opposed to debt capital, and bond as against bank finance, would, other things being equal, be expected to lead to some shrinkage in banks ’ balance sheets in relative terms. the extent to which this may happen is of course uncertain. it will depend on many factors, including the impact of any changes to the basle accord. but even if there is substantial disintermediation, it does not mean that banks will cease to be dominant players. my point is just that as euro securities markets develop and deepen, more of the finance banks arrange will be off balance sheet. i ’ m inclined to think also that we will see further consolidation within the european ( and indeed global ) banking sectors, though i think that will not primarily be a function of the euro, and is something i will touch on in a minute. now, all these developments offer opportunities for financial services firms globally. this is not a zero sum game. i expect to see financial centres within the euro zone growing in size over the next few years. but london will grow too, and i think it is significant that many of these potential developments depend on market practices and techniques pioneered in london. i see london as the engine for growth and innovation in the european capital markets. this is not a narrow parochial point. as i have already emphasised, uk financial services are highly internationalised and many of the uk – based beneficiaries of this process are owned elsewhere – in the us, europe, asia and elsewhere. nor does it reflect complacency. although london has tremendous critical mass – especially in the crucial area of human capital – one major implication of what i will say in a minute about technological innovation is that certain aspects of financial services – especially trading and settlement – are potentially more geographically mobile now than in the past. we are already in a market where it is possible for a trader in london to deal on a german exchange, call for delivery in luxembourg and make payment in paris. so, the advent of the euro is just one factor transforming the environment in which uk based financial services firms must operate. i would now like to

determined to ensure that the current appreciation of the exchange rate will not lead to an unnecessary reduction in aggregate domestic demand. we will take and use every measure at our disposal to ensure that this does not happen and that the economy remains buoyant. i have said before that i am not committed to a particular exchange rate of the shilling but because of the problems that are happening now which lead to a reduction in domestic demand, the bou will ensure that the appreciation of the exchange rate doesn ’ t worsen the situation regarding aggregate demand. we are not changing the policy of not having an exchange rate level to defend. i am saying that we will not allow the appreciation of the exchange rate to cause other problems on our goals. i am not changing the rule which we have followed all this while that the bou will not intervene in the market except when there is volatility. i herewith therefore announce that, from tomorrow, november 28, 2009, in addition to volatility, we will, until further notice, intervene to stop excessive appreciation of the exchange rate. we have a challenge of ensuring financial access. we have a challenge of ensuring that agricultural credit is made available to a wider sector of uganda ’ s population since it ’ s agricultural. i must say that while stanbic bank has come up with additional program to the finance minister ’ s agricultural credit program, i still want to see other banks come up and offer more credit. i am very committed to a liberal financial system and i am not persuaded that edicts about interest rates work. let ’ s work together and make sure that financial inclusion is expanded. let make sure that any attempts by some of the remaining elements in government who want to control interest rates are not given the chance to do so. it will be disaster if we attempt to control interest rates. mr. minister, hon. prof kamuntu, since you are the first person to free the shilling to float and to liberalize interest rates, i am glad to invite you to address this gathering.