emmanuel tumusiime - mutebile : secure banknotes vis - a - vis non - cash instruments in uganda speech by prof emmanuel tumusiime - mutebile, governor of the bank of uganda, at the launch of the new family of banknotes, kampala, 3 may 2010. * * * the chief guest, hon. minister of finance, planning & econ. development the speaker of parliament the deputy speaker of parliament hon. ministers hon. members of parliament his worship the mayor of kampala visiting governors – central bank of kenya and bank of tanzania members of the board, bou development partners chief executives of financial and other institutions representatives of currency printers and suppliers of currency notes the artists distinguished ladies and gentlemen i wish to welcome you all to this occasion when the bank of uganda launches a new banknote series. i am glad that honourable syda bbumba, the minister of finance, planning and economic development, is here to launch the new uganda shilling banknotes. her presence reflects the support the bank enjoys from its parent ministry and from government in its efforts to serve the public better. i am also particularly delighted to welcome the governors from the central banks of the partner states of the east african community. as you are aware, one of the roles assigned to the bank of uganda is to issue currency notes and coins. over the past 20 years, the bank has stepped up efforts on four fronts. firstly, the bank widened the range of denominations. we popularized the use of low denomination coins which are useful in small value transactions especially in the rural areas. secondly, we adopted a clean banknotes policy to maintain the integrity of our banknotes. we acquired notes processing machines that automatically sort out clean notes for reissue in line with clean note policy. thirdly, the bank has continually reviewed the security features of the banknotes to keep ahead of counterfeiters. fourthly, we have widened features on the notes to assist the public to easily differentiate the genuine notes from counterfeits in addition to assisting members of the public who may suffer from sight impairment to easily identify legal tender in its various denominations. i am pleased to recognize the presence of a delegation from uganda national association for the blind. their presence is a manifestation of the bank ’ s efforts to help the visually impaired to identify banknotes with the aid of a special design feature using the sense of touch. this is the first major change of currency design in over twenty years in uganda. it is a result of

choose to reveal such information in their speeches and other public communications. a natural next step would be to include a matrix of output, inflation, and unemployment, and the associated policy path assumptions that each policymaker submitted. this would make the information in the sep easier to interpret and give a better sense of the linkage between changes in economic conditions and policy. second, i believe the federal reserve should do a more comprehensive monetary policy report four times a year. currently, the chairman testifies before congress twice a year – in bis central bankers ’ speeches fact, he is doing so today – and that testimony is accompanied by a written report. in addition, the chairman holds press briefings four times a year to summarize the sep. i think there is an opportunity to combine these efforts in a more comprehensive report on monetary policy. most central banks that have adopted an inflation target have also sought to improve communication and transparency through the publication of a regular policy report. in the u. k., for example, the bank of england issues a quarterly inflation report. other countries produce a monetary policy report that discusses the central bank ’ s forecasts and the longerterm context of policy. these reports offer an opportunity to reinforce the underlying framework the central bank has adopted for the conduct of policy. i think the fed should consider producing a similar report to elaborate and reinforce its policy framework and how it relates to economic conditions. these reports will help improve the public ’ s understanding of policy, which will help make policy more effective and the central bank more accountable. third, i believe the fomc should adopt clearer guidelines on how policy evolves with economic conditions. the better the public and the markets understand how policy is likely to be adjusted as the economy changes, the more predictable policy becomes, which promotes price stability and better economic outcomes. the history of u. s. monetary policy is filled with stops and starts and changes in direction, yet the fed has communicated little about what drives those decisions. indeed, historically, central bankers have tended not to reveal such information, since they preferred discretionary policy over systematic policy. of course, policymakers do not know with any degree of certainty how economic conditions will evolve. so they cannot and should not say with any certainty what policy will be in the future. but policymakers can provide information about the factors that will influence their policy decisions. some call this a policy rule. milton friedman advocated a rule in the form of a k - percent growth rate of the money