as an essential input in the design of sound monetary policy administration in countries of waifem member banks. ladies and gentlemen, 3. 0 problems of liquidity forecasting liquidity forecasting is largely forecasting the monetary aggregates to obtain a reliable target of banks ’ idle reserves thereby ensuring an efficient management of bank resources through the weekly conduct of open market operations ( omo ). two main components of the omo forecast come to the fore : the optimal level of demand for total bank reserves ( odr ) and the estimated level of supply of total bank reserves on the day of omo ( osr ). fomo = odr - osr t t where fomo = the omo forecast for the day of trading. in making forecasts of the monetary aggregates, odr and osr, in efforts to derive the omo forecast, the authorities face a number of problems. permit me to highlight a few of them : • difficulty with forecasting base money ( monetary base ) since total bank reserves ( odr ) must always be consistent with the ultimate objectives of monetary policy, its computation begins with a forecast of the desired demand for and supply of money. however, while the computation of the demand for money is a fairly straight forward affair, that of the supply of money is problematic. herein lies the concept of the monetary base : the supply of money is a function of the monetary base adjusted by the money multiplier. too often, some of the components of the monetary base are outside the control of the monetary authorities. for example, as long as net credit to government, a component of monetary base, remains outside the control of the central bank, it will be difficult to achieve a stable monetary base, and hence a stable money supply. again, the requirement of the central bank to underwrite the issue of government debt instruments deprives the bank of the control over its portfolio of government securities or ncg, another component of monetary base. of course, the bank has little control over the net foreign assets, a major determinant of monetary base, especially where it is unable to sterilize capital inflow. thus liquidity forecasting is made difficult in circumstances where the central bank exercises weak control over the components of monetary base and therefore money supply. • difficulty with forecasting total bank reserves ( r ) total bank reserves is also a component of monetary base, b, where b = currency outside banks ( cob ) plus bank reserves ( r

##ance of the wider dimensions of the operations of the stock exchange. further consultations of this sort will continue as the situation demands. all of these activities have crystallised in today ’ s inauguration of the sierra leone stock exchange. again, this launching is not an end in itself. not only would we continue with the operationalisation of the exchange, but we will proceed with a number of related activities that will give greater strength and effectiveness to the new facility. in pursuance of this determination, we will advance the plan to create appropriate links between the capital market programme and the national privatisation programme, with a view to increasing the volume of shares traded on the exchange and provide for a high level of liquidity in the market. we will also proceed with the finalisation of modalities for the creation of a venture capital company, which would serve, inter alia, to improve the profile of some of the state enterprises earmarked for privatisation. this will increase their attractiveness to investors and improve the quality of shares to be traded on the market. as you would be aware, the present condition of some of the enterprises proposed for privatisation would require some further work for high value divestiture. their value would be enhanced through a process of mentoring and nurturing. moreover, the sale of these enterprises should not benefit only a small section of the society. the venture capital company will perform the mentoring function and also hold some proportion of the shares of some of these companies for periodical release to small private investors, who may not have the capacity to purchase such shares were they to be sold in a single parcel. this would help to bring about a wider share ownership structure in the country, empower its people and extend the distribution of the wealth of our nation. the establishment of the stock exchange will spurn a new set of financial activities such as rating agencies, investment advisers, registrars and brokers, thereby creating new avenues for employment and professional development. thus, in addition to the usual benefits of a stock exchange, including the pooling of risk, mobilisation of savings, the fostering of specialisation through the reduction of financial cost, improved allocation of investment engendered by reduction of the costs of information, and the collective impact of all of these on growth and development, the establishment of the stock exchange will open avenues for other ventures, with immense multiplier potentials. we are therefore today, through the launching of the sierra leone stock exchange