risk based supervision. there are periodic off - site and on - site examinations of banks ’ performance based on internationally accepted benchmarks. in addition, the bank of uganda in its effort to mitigate risks in the banking sector introduced the credit reference bureau ( crb ) and we would like to request that all sfis ensure that their borrowers register as this will create a database for managing some of the banking risks. hennie van greuning : analyzing banking risk – a framework for assessing corporate governance and financial risk management. way forward given the challenges faced by the banking sector with respect to frauds, the measures envisaged to improve the risk management systems and maintain a strong vibrant financial sector could be twofold ; those that can be done within the banking industry and its players, and those that can be initiated from outside the banking sector. internally, the banking sector players should rethink the strategy of elevating the level of scrutiny on their employees or what has become known as “ know your employee ” or kye. available statistics indicate that most of the bank frauds are internally perpetrated by employees who exploit weaknesses / lapses within the organization. the electronic era has made life better for banks in the area of transaction processing and timely delivery of value but has also introduced new types of risks and exposures. information systems that have an element of cyber or internet connection may potentially be open to the whole world and computer hackers have often used this route to cause financial loss to some financial institutions around the world. additionally, banks should enhance risk profiling of their customers. they should go beyond the traditional “ know your customer ” ( kyc ) to enhanced customer due diligence ( ecdd ). banks should be prepared to invest in the training of their employees so as to accumulate adequate human capital for managing those risks associated with the changing banking environment. most importantly, banks much exhibit high standards of good corporate governance. externally, the dearth of punitive legislation has been sighted as one of the major factors promoting frauds. as long as fraudsters know that even when sentenced, their illicit assets remain intact, they will continue in this business. enactment of laws like the anti - money laundering bill that provides for the seizure of such assets may serve as a deterrent. to facilitate faster administration of justice, the government could create specialized financial investigative sections of police. the government should revive its project of establishing common infrastructure like the national identification card to facilitate identification of customers. i thank

later this year. like in other parts of the world, there is uncertainty as to the strength of the recovery we are going to see. 3. monetary policy during 2008 the mpc was more concerned about the generalised nature of the inflation dynamics that were brought about primarily by the succession of supply side shocks. it was only in the latter part of the year that global developments began to have a significant impact on the economy. the contraction in output, and hence the widening output gap, combined with an easing in inflationary pressures, allowed for a change in the monetary policy stance. the mpc also decided to meet more frequently in order to assess the rapidly changing operating environment in a timeous manner and to be able to act appropriately when deemed necessary. given the lag in the reaction of inflation to interest rate changes, and its focus on the medium to long - term expected inflation trajectory, the mpc decided to reduce the repurchase rate by 500 basis points between december 2008 and august 2009, despite the fact that inflation was still above the upper end of the inflation target range. at the most recent mpc meeting in september, the repo rate was left unchanged at 7, 0 per cent. the mpc is of the view that the risks to the inflation outlook appear to be fairly evenly balanced, and with the current monetary policy stance, the most recent forecast indicates that inflation should return to within the target range on a sustained basis by the second quarter of 2010. upside risks to this forecast are mainly high increases in administered prices, above - inflation increases in nominal unit labour costs, as well as to an extent oil price developments. on the other hand factors such as weak consumption expenditure, weakness in credit aggregates, and the relatively strong exchange rate of the rand will provide downside pressure on inflation. reuters consensus forecast, august 2009 survey. 4. balance of payments the contraction in real gross domestic product and the steep decline in the volume of merchandise imports in the first half of 2009 led to a turnaround in the deficit on the trade account in the second quarter of 2009. south africa ’ s trade balance, which had registered deficits since the third quarter of 2005, consequently changed from a deficit of r53, 4 billion in the first quarter of 2009 to a surplus of r26, 6 billion in the second quarter. the contraction in domestic economic activity since the middle of 2008 has also had a positive impact on the deficit on the country ’ s services, income and current transfer account with