limit the temptation to use the fed ’ s balance sheet as an instrument of fiscal policy. a road map to the future once we know where we want to go, we can begin to map out a path that will take us there. by articulating a systematic plan that gets us to our objective, we improve communication with the public, reduce uncertainty in the marketplace, and lend credibility to the commitment that policymakers will follow through. bis central bankers ’ speeches any exit plan that is to lead us to a corridor - like operating system has to describe how the fed funds rate or interest rate on reserves will be increased and how the balance sheet will be reduced. there are many ways to do so, but in every case, we must remember that monetary policy decisions should be contingent on the evolution of the economy. in late march 2011, i outlined a proposal for a systematic, rule - based approach that would involve the fed ’ s selling assets from its portfolio as it increased its policy rate, with the pace of sales dependent on the state of the economy. the plan would get us back to a normal operating environment in a timely manner, with the fed ’ s balance sheet reduced to a size that would again allow the federal funds rate to be the primary policy instrument. i also suggested that the first step of the normalization process would be to increase the interest rate paid on reserves and the targeted federal funds rate away from the zero bound, perhaps to 50 basis points. the federal open market committee would also announce its intention to stop re - investing the proceeds from maturing agency and treasury securities. these decisions would initiate the normalization process and begin to raise the funds rate and shrink the balance sheet from the start. how the process evolves from that point will depend on the plan and the state of the economy. the committee would also announce that at subsequent meetings it would regularly evaluate the policy rate based on economic conditions, as it always does. sales of assets between meetings beyond those maturing would also be tied to economic conditions, just as policy rate decisions are. the fed would announce a pace of sales, which would increase when the committee chose to increase the policy rate. since the amount of securities to be sold between meetings would be determined in advance, the public and markets would see the fed shrinking its balance sheet in a predictable manner. for example, the committee might set a sales pace of $ 20 billion of assets between fomc meetings and announce that for each 25 basis points the funds rate target

njuguna ndung ’ u : enhancing the cross border payments system across the east african community remarks by prof njuguna ndung ’ u, governor of the central bank of kenya, at the official launch of the east african payments system ( eaps ), nairobi, 16 may 2014. * * * dr. enos bukuku, deputy secretary general, east african community ; ms. mwanamaka a. mabruki, principal secretary, ministry of the east african affairs, commerce and tourism ; fellow governors : prof. benno ndulu, governor, bank of tanzania ; hon. john rwangombwa, governor, national bank of rwanda ; mr. jean ciza, governor, bank of the republic of burundi ; dr. louis kasekende, deputy governor, bank of uganda ; distinguished guests and colleagues ; ladies and gentlemen : on behalf of my fellow governors from the eac central banks, it is my great pleasure to welcome you all to the launch of the east african payments system ( eaps ). the eaps, which went live on monday 25th november 2013, is a cross border payment initiative by the eac central banks and the eac secretariat, working closely with commercial banks in the region. it is part of the east africa ’ s payments modernization efforts to enhance cross border payments system across the eac region. the system currently integrates with the respective real time gross settlement ( rtgs ) systems of kenya, uganda and tanzania that utilize the internationally recognized swift messaging network for safe and secure delivery of payment and settlement messages. it sends and receives cross border payments in the region ’ s currencies that is kenya shilling ( ksh ), tanzania shillings ( tzs ) and uganda shilling ( ugx ) from any of the commercial banks in the three east african countries on a real time basis for the region ’ s business community. eaps will therefore enable the public to pay as well as receive payments on real time basis. as such, its implementation will address deficiencies in the current cross - border payment methods, through enhanced efficiency and risk controls. all the commercial banks in kenya, tanzania and uganda are participants in the system. commercial banks in rwanda and burundi are expected to join later in the year. with respect to regional trade, the system is expected to promote, facilitate and support trade within the eac region. in this regard, eaps has many benefits, they include : • real time