has increased significantly in recent years, posing further challenges to the conduct of monetary policy. to a large extent, most of us would agree that globalization has been positive insofar as it has imposed market discipline on us. there are many who also think that globalization actually reduces volatility. going forward – what we need to do as the imf has noted, most of the world will likely emerge relatively unscathed from this crisis. the recent shifts away from the us as being the key driver of global growth, together with the better balance achieved during the last two years represents significant support for the global economy. however, the ramifications of any sharp slowdown in the us always remain and should not be underestimated. whilst the global economy is deemed to be robust enough to shake off us weakness, contagion effects means that the sub - prime problems can contaminate other countries. as noted, our markets are better prepared for, but certainly not immune to global financial market risks. a reduction in global risk appetite would eventually reduce net capital inflows into our markets and may dry up much needed fdi. if the us, which has a 25 per cent share of global gdp, slows down, it will definitely have an impact on the entire global economy, including east africa. the next few months will therefore, be crucial for the us and international markets. however, our lower external debt, better external reserves levels, more prudent fiscal management, debt markets with a investor base that is not dependent on foreign investors, will all undoubtedly help to cushion our financial system compared to say, those of china which exports a fifth of all chinese exports. china ’ s central bank estimates that ever 1 per cent drop in us economic growth translates into a 6 per cent drop. the fact however, is that we should be concerned about the problems in the us. a slowdown in the biggest economy in the globe will have repercussions for all of us. under these circumstances, extreme vigilance on the part of policy makers is warranted. during periods of financial market stress, the focus of central banks shifts to ensuring the banking system remains functional.

emmanuel tumusiime - mutebile : uganda ’ s primary dealer system remarks by mr emmanuel tumusiime - mutebile, governor of the bank of uganda, at the annual primary dealer award ceremony, kampala, 31 january 2013. * * * distinguished guests chief executive officers of primary dealer banks members of the press ladies and gentlemen good afternoon it is my pleasure and honor to welcome you to this ceremony, at which we will recognize the best performing primary dealer in uganda government securities in 2012. introduced in 2003, the main objective of the primary dealer system is to promote financial markets development and to reduce the costs associated with issuing government securities, by : 1 ) increasing demand for government securities ; 2 ) increasing market efficiency, thereby making government securities easier to buy and sell ; 3 ) encouraging secondary market trading of government securities, and ; 4 ) improving the quality of market information that is shared amongst the participants and with the central bank. by and large, the primary dealer ( pd ) model, that requires all investors in government securities to access the primary market through a pd, is proving successful in achieving its objectives. in particular, the pds have contributed to the growth of the securities market by ensuring high and consistent demand for securities at the primary auctions. over the last five years, most of the primary auctions for government securities have been oversubscribed by large margins, with the auction bid - coverage ratio for both treasury bills and bonds averaging more than 200 percent, which is an indication of the strong demand for government debt by investors. the primary dealers have also contributed to the growth of the secondary market in government securities by quoting effective two - way prices. the ratio of secondary market turnover to the stock of outstanding securities increased from 35 percent in 2011 to 58 percent in 2012, which reflects the increasing buoyancy of the secondary market. despite the progress we have made in developing the government securities market in uganda, we will not rest on our laurels. instead the bank of uganda, in collaboration with all of the stakeholders, is implementing further reforms to enhance market efficiency, transparency and competition. these reforms include the following : i ) the process of upgrading the reuters system to allow real time reporting and viewing of market activity – thereby enhancing market transparency and minimizing price distortions – is in the final stages of implementation. the first stage of the upgrade, involving 10 commercial banks, is expected to be ready by the end of march of this year and the second stage, involving