##economic forecasts are only one - albeit important - input into the policy process. they are always evaluated in the context of, and crosschecked against, other analyses, including, most importantly, the analysis conducted under the first pillar of our strategy. moreover, forecasts do not embody the governing council ’ s views. indeed, because the exercise of policy judgement remains the preserve of the governing council, one should not expect developments in the published macroeconomic forecast to mechanistically feed through into policy decisions. the publication of forecasts by the ecb will have to reflect the important, but limited role forecasts play in the monetary policy process. monetary policy cannot - and should not - be reduced to some simple, time - invariant policy rule, which links monetary policy decisions to a small number of indicators or a conditional forecast in a mechanical fashion. such monetary policy cannot be pursued in a world, which is uncertain, complex and constantly evolving. the ecb has taken the view that the uncertainty and complexities in the structure of the economy should be openly and honestly reflected in its monetary policy strategy and, therefore, in the presentation of policy decisions to the public. this is not only transparent, but will also promote a more genuine understanding of monetary policy over time. in conclusion, there is certainly scope to increase the degree of common understanding between the ecb and the public at large. clearly, a process of learning and familiarisation with the new regime is required on both sides and there are indeed already indications that the situation is improving. we are working hard to play our part in speeding up this learning process. conclusion ladies and gentlemen, let me now conclude by thanking the european business school london once again for having given me the opportunity to share these thoughts with you today. making monetary policy in a broad monetary union is a complex task. with my presentation, i hope i have convinced you that the ecb has the credibility, the appropriate strategy, the technical expertise and the determination to successfully perform this task and fulfil its mandate. for my part, i have little doubt that this is indeed the case.

##es ) who have a track record and good performance to use their reputational capital to access credit. the sme sector is very important to the development of this country as envisaged in vision 2030. ladies and gentlemen : the third benefit is to enhance information symmetry and support financial development. the existing state of information asymmetry between borrowers and banks is a constraint to innovation and financial sector development. two important outcomes in information asymmetry are the moral hazard problems from the borrowers and adverse selection from the banks. these two problems punish the economy with low provision of credit. information asymmetry has also led to severe adverse selection among banks themselves. fourth, in a segmented market like ours, some segments remain untapped because banks do not have adequate information to price suitable products. in part this has also contributed to the high cost of credit. borrowers have had to bear a “ risk premium ” because of this lack of information. it is therefore the central bank ’ s expectation that savings arising from the increased credit information shall translate to lower cost of credit. in turn, more kenyans will be able to access credit from banks. as you all know, the monetary policy committee ’ s ( mpc ’ s ) efforts since september 2009 to signal to the market the need to expand credit to the private sector at affordable interest rates has not yielded the desired results. banks have continuously cited structural rigidities as impeding their wish to lower interest rates. with the launch of credit information sharing, we believe it signals the seriousness with which their concerns are being addressed. banks should henceforth pass the accruing benefits to the kenyan public through appropriate reductions in the cost of credit. ladies and gentlemen : the current level of interest rates is a combination of costs ( like information search costs ) ; risk premium most of it unrealized goes to profits ; our legal system with delays and lack of clear enforcement of contracts ; and of course banks ’ profit margin. high interest rates increase the level of default risks. with good credit track records, the risk premiums and search costs imposed on customers will ideally shrink. in this regard, we expect that credit information sharing will be an incentive for good credit behaviour that will attract competitive pricing of credit facilities. the message to kenyans is that now more than ever before, there will certainly be benefits accruing from adhering to the contractual terms of loans. ladies and gentlemen : in summary, credit information sharing will increase vibrancy in the