the government has usually been able to extend the limits on new borrowing – which were, in any case, fairly generous – simply by diagnosing a “ disruption of the macroeconomic equilibrium ”. the lessons from the european debt crisis have also taught us that, in practice, the binding effect of our rules was not very strong. since the start of monetary union, germany, france and italy have exceeded the deficit limit of 3 % in seven, eight and even nine years respectively. whether the reforms will put real teeth into the stability and growth pact and the fiscal compact in this respect depends heavily on the european commission and how it uses its extra scope for discretion. the first time the commission applied the new rules, it showed itself to be very flexible, granting spain, france, slovenia and cyprus longer deadlines to make adjustments than those actually envisaged in the stability and growth pact. i believe that such exemptions should be made only in well - founded exceptional cases, for this ultimately weakens the structural consolidation requirements and postpones them until a later date. making exceptions for a large number of countries simultaneously undermines the disciplining effect of the fiscal rules. in view of past experience with fiscal rules, in particular, i strongly believe that the euro area can only be maintained as a stability union in the long run if its framework sufficiently embodies a key principle of regulatory policy : the principle of liability. bis central bankers ’ speeches in the context of public finances, this means that those who make decisions on spending must also take responsibility for them. in other words, there must be a balance between control and liability. in principle, the maastricht framework assigned both liability and control to national governments. during the crisis, the efsf and esm bailout funds stabilised the euro area but also increased the mutualisation of liability for previous national errors. to restore the balance between control and liability, i only see two plausible options : either we shift powers to monitor and intervene to european level by creating a fiscal union, or we strengthen the member states ’ individual liability and responsibility in a return to the maastricht framework. this also ultimately means that sovereign insolvencies cannot – and must not – be ruled out. they must be possible without also causing the financial system to collapse. the current balancing act between individual responsibility and mutualised liability is likely to lead to new strains in the long run. to exaggerate slightly, as adorn said, “ there

be dislodged now. in an effort to bring down the cost of offering financial services to the kenyan public, central bank together with other stakeholders have put in place a business model aimed at broadening financial inclusion to the majority of kenyans at a lower cost – the agent banking model. it is envisaged that this model will enable banks to leverage on additional cost effective distribution channels to offer financial services. to achieve this, the banking act was amended through the finance act, 2009, to permit banks to contract third parties to provide certain banking services on their behalf. the guidelines to facilitate the rolling out of agency model were issued by the central bank and took effect from may this year. second, the cost of screening and monitoring existing and potential borrowers will decline with the introduction of credit reference bureaus. this is the time to use this screening and monitoring technology to reach the sme in need of support to invest and expand. the budget proposals in the finance bill 2010 have come up with a wonderful proposal on sme to enhance this. the monetary policy committee ( mpc ) has since september 2009 been implementing decisions aimed at signaling to the market the need to expand credit to the private sector at affordable interest rates. this has been achieved by way of lowering central bank rate and cash ratio requirements. i am happy to note that the mpc decisions have started to bear fruit as evidenced by lowering of base rate by a number of major banks in kenya, with the lowest base rate currently standing at 10 %. we have room to do more, commensurate with returns on investment that banks screen and monitor. finally, let me reiterate that central bank and indeed the government of kenya will continue to pursue policies that create conducive environment to allow the growth of the financial sector by encouraging the provision of banking services to majority of the unbanked kenyan population and to support the real sector of the economy. we want to encourage pan african banks like ecobank to have foot prints in kenya to broaden the financial services platform. with these few remarks ladies and gentlemen, it is now my honour and pleasure to declare the rapid money transfer product officially launched. thank you and god bless you all.