gaily traipse off to the " lost and found ". likewise, if we can correctly communicate the board members'common knowledge to market participants and the general public, then we might expect that it can be also shared among market participants, and thus as a result, we can presume that market expectations will converge on the longer - run price stability. 7. if we look at the fan chart, we can see that our " understanding " is different from the " inflation target " adopted by the bank of england, which seems to aim at achieving a 2 % target after 8 quarters. we have no specific time horizon attached to our " understanding ". furthermore our " understanding " is also different from the ecb's numerical definition of price stability over the medium - term ( " below 2 %, but close to it " ) in the sense that the board members'opinions determine the numerical range. if there is a change in the membership of the board, then the range also changes. further, it is also possible that our " understanding " changes to reflect changes in the structure of the economy. within our framework it is possible to revise the numerical range regularly. so far there has not been any change in the numerical range of our " understanding ", despite routine changes in board membership. two perspectives approach 8. the new policy framework is entitled the " two perspectives approach ", in contrast to the " two pillars approach " advocated by the ecb. the first perspective examines whether the outlook deemed most likely by the boj follows a path of sustainable growth under price stability within the forecast period, while the second provides an assessment of various risks, including low - probability events which can cause serious damage to the economy beyond the forecast time horizon. the latter perspective shares features in common with the " risk management approach " urged by former federal reserve chairman alan greenspan 1. transparency and flexibility 9. keeping in mind the " understanding of medium - to long - term price stability ", we make policy decisions by examining the plausibility of our scenario presented in the semi - annual outlook and by assessing the various risks and the uncertainty ahead for our economy. as the plausibility of forecasts and the examination of risks play a key role, the new policy framework can be broadly described as a " forecast - based policy " which is inherently forwardlooking ( bernanke ( 2004 ) ). the publishing of projections, and the related explanations and reasoning, contributes to enhancing the transparency of

njuguna ndung ’ u : kenya ’ s financial markets and payment systems developments remarks by professor njuguna ndung ’ u, governor of the central bank of kenya, at the launch of the funds settlement system for equities and corporate bonds through kepss, nairobi, 27 january 2015. * * * ms. rose mambo, chief executive, central depository & settlement corporation ; mr. paul muthaura, ag. chief executive, capital markets authority ; mr. andrew wachira, acting chief executive, nairobi securities exchange ; chief executives of the central depository agents ; chief executive, kenya bankers association ; ceos of commercial banks here present ; chief executive, kenya association of stockbrokers & investment banks ; distinguished participants ; ladies and gentlemen : i am pleased to join you today on this auspicious occasion to launch the settlement system for equities and corporate bonds through the real time gross settlement platform of the central bank of kenya, commonly referred to as kepss. at the outset, i congratulate the technical teams from the cdsc, cma and cbk that ensured the success of this process. ladies and gentlemen : we are gathered here today to celebrate another milestone in the development of kenya ’ s financial markets and the developments in the payment systems. as you are all aware, the financial landscape has changed considerably in kenya and the countries in the region. for the region to attract foreign investors and deepen its markets, there is need to enhance our financial markets systems and processes to meet international standards. in this regard, i wish to recognize the east african community ( eac ) financial sector development regionalization project ( fsdrp ), for spearheading an assessment of eac partner states ’ compliance to the international organization of securities commissions ( iosco ) objectives and principles of securities regulation, particularly principle 38 on clearing and settlement. the project assessed the levels of development of the securities markets payments and settlement system as well as existing capacity to comply with principle 38, and developed action plans for compliance with the principle of delivery versus payment ( dvp ) that formed the basis for the current developments. ladies and gentlemen : kenya ’ s development blueprint, vision 2030, envisages a financial sector that is vibrant and globally competitive in driving high levels of savings and financing the country ’ s investment needs. to achieve this goal, the clearing and settlement systems should be subject to regulatory and supervisory requirements that are designed to ensure that