emmanuel tumusiime - mutebile : introduction of a chogm commemorative banknote in uganda address by mr emmanuel tumusiime - mutebile, governor of the bank of uganda, at the press conference for the official launch of the chogm commemorative shs 10, 000 banknote, bank of uganda, kampala, 20 november 2007. * * * i am pleased to inform you the bank of uganda decided to issue a shs 10, 000 chogm commemorative banknote on november 20, 2007 to celebrate and mark uganda ’ s hosting of the commonwealth heads of government meeting to be held in kampala november 2325, 2007. central banks worldwide issue commemorative coins and notes to mark important events of national and international interest. in this regard, the bank has in the past issued the following commemorative coins : 1. fao 1968 coin to mark the united nations world food day with the theme ‘ produce more food ’ 2. pope paul vi coin issued in 1969 to commemorate the pope ’ s visit to uganda. 3. international year of the disabled persons coin issued in 1981to educate the public about the rights, talents and needs of the disabled throughout the world. 4. bank of uganda 20 years of service coin issued1986 to mark bou ’ s 20 years of service. 5. the bank of uganda 40th anniversary commemorative coin issued in august 2006. issuing the chogm banknote will be the first time the bank of uganda is issuing a commemorative banknote. the commemorative shs10, 000 banknote, unlike the previous commemorative coins will be a circulation and transaction banknote. it will circulate side by side with the existing banknotes and coins. it has however been issued in limited quantities and is a one time issue. immediately after this launch, the bank of uganda will distribute the commemorative banknotes to commercial banks for issue to customers in the normal course of business. the commemorative banknote will be issued in limited quantities and, therefore banks and financial institutions have been requested to issue the chogm banknotes randomly to customers together with other circulation notes using the atms and in the banking halls. banks shall accept exchange of existing bank notes and coins for the chogm banknote and vice versa. let me now turn to the features of the shs10, 000 chogm commemorative banknote. as you can see from the publicity materials and samples, the chogm banknote is similar to the current shs 10, 000 banknote in dominant colors gradations

output gap has opened up. actual output is lower than potential mainly because of constraints on the demand side, which include constraints arising from macroeconomy policy and those emanating from the weaknesses in the global economy. although we expect that real gdp growth will pick up in 2012 / 13, it will not be anywhere near fast enough to close the negative output gap and i do not think that real output in the economy will be restored to its potential level before 2013 / 14 at the earliest. a negative output gap tends to dampen inflationary pressures, because it means that aggregate demand in the economy is weak relative to aggregate supply. consequently, in the current circumstances it is possible to use monetary policy to try and boost domestic demand and, therefore, real output without jeopardizing our objective of controlling core inflation at 5 percent. this is why we have reduced the cbr over the last few months ; we would like interest rates to fall to stimulate a recovery of bank lending and thus a recovery of demand for goods and services from the private sector. however, it is necessary to recognize the constraints and limits on our ability to achieve our objectives for output. first, as i have already mentioned, the current coincidence of interests between our inflation and output objectives will only last as long as there are no further supply sides shocks to the economy. secondly, in an economy which still has a relatively shallow financial system, the overall impact of monetary policy on aggregate spending in the economy is not large. the main transmission channel of monetary policy to the real economy is through bank lending to the private sector, but the stock of bank lending is only 16 percent of gdp. a large share of household spending in the economy is not directly affected by monetary policy, although there may be some indirect effects through employment. furthermore, there are other factors, as well as monetary policy, which affect both the supply of, and demand for, bank credit, such as the level of household indebtedness and the value of assets such as land and property which are used as collateral for loans. i would now like to turn from the objectives of monetary policy and make a few remarks about its operational modalities, and in particular the role of the central bank rate in our monetary policy framework. in effect the cbr performs a dual role. it acts as a guide for short term interest rates and it provides a very visible signal of the stance of monetary policy. in modern monetary policy frameworks, the signaling of the stance of