the euro area and the united states ”, monetary policy report, february 2011, and “ the relationship between the business cycle and the labour market in sweden ”, economic commentaries no. 2, 2010, sveriges riksbank. okun ’ s law shows the short - term relationship between the level of unemployment and gdp. bis central bankers ’ speeches competitive pressures in the economy, labour market legislation, the negotiating strength of employers and employees and so on. 8 these are the factors that determine equilibrium unemployment. so affecting these would require broad - based economic policy measures. although it is obvious, it is still important to bear in mind that monetary policy cannot affect these fundamental conditions for long - term growth and employment. breaking down unemployment – a complicated story on the other hand, however, monetary policy is able to influence the cyclical part of unemployment via effects on the aggregate demand in the economy. in theory, this is a matter of using monetary policy to keep actual unemployment as close to the equilibrium level as possible. in practice, this is difficult, as equilibrium unemployment is not observable but must be calculated indirectly. these calculations are highly uncertain, something which is true of all gap calculations in which various actually - measured quantities are related to an estimated, unobserved quantity. so this also applies to the gdp gap, the hours gap, and so on. but the unemployment gap has an advantage over other gap measures, as the actual statistics are not revised, as is the case with gdp and to some extent the number of hours worked, for example. allow me to now discuss this uncertainty when it comes to calculating the labour market gap in a little more detail. calculations of equilibrium unemployment according to a common interpretation, equilibrium unemployment is the unemployment that arises when an economy is not impacted by new shocks or disruptions for a longer period of time and is thus in a state of long - term equilibrium. 9 equilibrium unemployment is thus independent of economic activity. however, this is a theoretical concept. in practice, the economy is never in a shock - free state in which long - term equilibrium has been achieved. assessing the level of equilibrium unemployment depends partly on the theoretical model used as a basis and partly on the calculation methods used. there is no consensus on which method of calculation is best, and this creates uncertainty on the level of equilibrium unemployment. let me illustrate this with a diagram. the figure shows how equilibrium unemployment in sweden has been calculated for the period 1980 – 2010 using three different methods. the

louis kasekende : stronger rules foster growth, stability keynote address by dr louis kasekende, deputy governor of the bank of uganda, at the official opening of the banking, finance and insurance expo 2011, kampala, 15 april 2011. * * * uganda ’ s banking industry has experienced significant transformation over the past three years, with rapid growth in the number of service outlets for various categories of financial services. branches of commercial banks, credit institutions and microfinance deposit - taking institutions have increased from 194 in 2007 to 397 in 2010. similarly, the number of automatic teller machines has risen from 262 in 2007 to 598 by december 2010. in addition, numerous financial products and customized services have been rolled - out by financial institutions in response to the ever - changing tastes of the clientele. these include electronic banking services, faster methods of money transfers, mobile banking, transfer services, and flexible banking hours to suit different categories of customers. the deputy governor said that the central bank is cognizant of the inter - linkages between the various sectors of the financial system because instability in one sector could eventually spill over into other sectors and spark off system - wide crisis. he urged regulatory agencies to draw lessons from the financial crisis that rocked the western world and spilled over to the developing economies. each sector must be effectively regulated in order to foster systemwide soundness and stability and mitigate attendant risks. “ to this end, bank of uganda has signed a memorandum of understanding with capital market authorities and uganda insurance commission in order to foster formal exchange of information for regulatory purposes. “ bank of uganda has also set up a financial stability department and financial sector surveillance committee to look at the macro - linkages, ” he said. uganda ’ s financial system comprises formal, semiformal and informal institutions. the formal institutions include banks, microfinance deposit - taking institutions, credit institutions, insurance companies, development banks, pension funds and capital markets. the semi informal institutions include saccos and other microfinance institutions, whereas the informal ones are mostly village savings and loans associations. formal institutions are less prominent in rural areas than urban areas and they only serve 14 % of the rural population. informal institutions play an important role in the rural service provisions and serve approximately 12 % of the rural population. these numbers indicate that uganda ’ s financial system is still quite shallow. most ugandans ( 62 % ) have no access to financial services. the number of the population holding accounts in banks is