next year. the strength of the euro area ’ s economic expansion in the past few months is in line with these forecasts. in fact, recent indicators suggest that, following the period of acceleration, the economic expansion may now have settled at a high rate of growth. the overall level of confidence has remained at, or close to, record highs in recent months. moreover, employment continued to grow strongly in the first half of this year and the rate of capacity utilisation has risen further. taken together, these factors should underpin the growth of private consumption and investment, and thus that of domestic demand. the positive outlook for the euro area is also supported by external developments. the outlook for growth of the world economy, and thus for growth of euro area exports, has remained favourable. forecasts of world growth have consistently been revised upwards over the past few months. expectations of a period of sustained economic growth in the euro area can also be found in euro area bond markets. overall, longer - term bond yields in the euro area have shown a very high level of stability in the course of this year, with fluctuations being contained within a relatively narrow range. the annual rate of increase in the harmonised index of consumer prices ( hicp ) was 2. 4 % in july 2000. recent consumer price developments in the euro area have been very much influenced by the strong rise in oil prices and the depreciation of the exchange rate of the euro. while monetary policy cannot address short - term developments in prices, it is imperative for monetary policy that medium - term upward pressure on prices be contained. the risk that the current pressure on the hicp might spill over onto costs and prices determined in the domestic economy must be taken seriously. this holds true in particular in the context of the favourable prospects for economic growth. the governing council reacted to this picture by raising the main ecb interest rates at its meeting on 31 august 2000. this step followed a series of interest rate increases implemented since november 1999. the governing council will continue to remain alert to emerging risks to price stability. it is a matter of fact that recent oil price increases have caused the terms of trade of the euro area to deteriorate, and thus have also reduced real income. this loss of real income cannot be avoided for the economy as a whole. attempts to shift the burden of this loss within the economy will risk endangering the continuation of a non - inflationary growth process. for the maintenance of price stability, it will

booms. over the last decade new entry and regional economic integration have combined to spur competition in the financial services industry in uganda. furthermore, banks are embracing information technology to offer innovative financial products, such as mobile money, as well as improve the efficiency of their operations. several new banking products are on the market. innovation and growth in the banking market are essential for meeting the needs of consumers and businesses for financial services, but they also generate new sources of risks. bis central bankers ’ speeches traditionally credit risk was the major type of risk facing banks in uganda. the adoption of it increases the importance of operational risk, while the increasing integration of the uganda financial sector into global financial markets, through cross border banking and capital flows, also creates new sources of risk. the evolution of technology has made possible the issuance and innovation of many varied banking products including the visa, mastercard, online banking, mobile money and e - commerce. all these facilitate modern banking. it is a key driver of new banking products like mobile money transfers. today, it innovations have influenced our ways of living in many fields including banking industry and we all benefit from the new technologies. however, the growth of it investments and sophisticated products as well as advanced services in the banking industry comes with a concern on “ security ” and new risks which is the challenging key to propel the sustainability of such growth. what is the role of the central bank in the financial sector? the primary responsibility of the bou is to regulate the financial sector. regulation has two objectives. the first is to protect the interests of depositors. we do this by imposing prudential requirements on banks, under the framework of the financial institutions act ( fia ), 2004 such as minimum capital requirements and liquidity requirements and restrictions on risk taking such as limits on large loan and foreign exchange exposures. we also intervene in distressed banks, again under the framework of the fia, to ensure that banks do not collapse with insufficient funds to repay their deposits. the second objective of regulation is to preserve financial stability ; to prevent financial crises. this also involves ensuring that banks comply with the prudential regulations in the fia. but we are also intending to introduce additional regulatory measures, which are informed by the macroprudential approach that i mentioned earlier, which are aimed specifically at mitigating systemic risks. lessons learnt from the past crises have taught and reminded us not to ignore what adverse effects may come afterwards. admittedly, bou is just catching up with