would like to stress that these measures are really necessary. not only to prevent further harm, but also to restore trust in the financial sector. trust is an extremely important aspect of any services sector, and the financial sector is a services sector pur sang. if a feeling of uneasiness remains among clients and investors, or financial institutions cannot trust each other as they should, then financial ( and consequently economic ) development grinds to a halt. so restoring trust in the financial sector is an absolute priority and we have to go great lengths to achieve this. at the same time it seems as if the sense of urgency for change among bankers and politicians has somewhat diminished lately, now that we see the first signs of recovery. opposition against the proposals from the basel committee is growing, through lobbies from the financial sector. for this reason, we, as supervisors, have to do our utmost best to uphold these proposals, because otherwise countries may be forced to implement measures on their own. the result of this will be a distortion of the international level playing field, which in the end will not benefit the financial sector. it is for this reason that we will organise a comprehensive quantitative impact study in the first half of this year. with this impact study we can see what the impact of all individual proposals will be, as well as the aggregate impact of all proposed measures combined, so that we can implement measures with care, in a responsible and well - considered manner. and all of these measures will be considered in the light of the economic recovery, making sure that they will not harm the recovery process. i am aware of the current debates about reducing the size of the sector, adding taxes, cutting bonuses, and the like. it is true that there are indeed excesses which are not acceptable anymore, and these have to be dealt with. at the same time, we should refrain from overreacting and take care to not implement measures which we have not fully thought through. beside all these new regulatory measures we have realised that there is also an urgent need for closer international supervisory cooperation. the rapid development in cross border banking has shown us supervisors that our current organisational structure is no longer adequate and limits our ability to rapidly respond to developing situations. a shift towards a more unified regulatory framework has therefore slowly been set into motion, for instance in europe with the new structures for cebs or ceiops, or through the intensified use of supervisory colleges. crucial, though, in this process, is full and mutual

be taken purely on commercial criteria, without being distorted by the provision of cheap credit or other forms of finance from the government. government induced distortions in financial markets will lead to the misallocation of resources, reducing the social rate of return to these resources. modernising smallholder farming will entail smallholders making greater use of purchased farm inputs. hence modernisation will require smallholders having better access to finance. nevertheless finance is unlikely to be the binding constraint on modernisation of smallholder agriculture and unless more important constraints are tackled, enhancing smallholders ’ access to finance will be ineffective. policy measures to strengthen the provision of financial bis central bankers ’ speeches services in the rural areas must be part of a much broader set of interventions to support smallholders to adopt modern farm technology and produce for the market, of the type i have already mentioned. unless smallholders have adopted good agricultural practises, such as the use of improved seeds, proper field preparation, timely planting, weeding and pest control, proper harvest and post - harvest handling, etc – practises which can improve yields significantly – they will not be able to utilise credit effectively because their farms will not be profitable. how should government support the development of rural financial markets? the key interventions required are to alleviate the market failures which impede the delivery of financial services to farmers. for example, it is necessary to strengthen the institutional environment for loan security to reduce the credit risks of lending to farmers. strengthening land rights to allow farmers to use land as loan collateral would help to make farmers more creditworthy. the proposed establishment of a collateral securities registry and the enactment of the chattel securities bill, which is currently before parliament, will help to widen the range of assets which are acceptable to lenders as collateral. promoting the warehouse receipt system set up by the uganda commodity exchange would also be a useful measure to support lending to agriculture. microfinance institutions ( mfis ) and savings and credit cooperatives ( saccos ) are much better suited institutionally than commercial banks to serving small farmers, but they are often constrained by managerial and technical weaknesses. hence there is an important role for government to assist mfis and saccos to strengthen their management and the professional skills of their officers. the bank of uganda is encouraging the larger tier 4 mfis to upgrade to become licensed deposit taking mdis. assisting mfis and saccos to strengthen their technical and managerial capacities so that they can mobilise funds from the