can either increase or decrease the overall economic uncertainty. more uncertainty means more savings and even lower equilibrium interest rates. through this channel, fiscal policies have the capacity to complicate the conduct of monetary policies, or, on the contrary, to make it easier. this is especially true in the euro area, where the single monetary policy interacts with 18 ( soon to be 19 ) national fiscal policies. there are rules and frameworks in place to reduce the uncertainty associated with this interaction. whether they are, or not, correctly implemented will make a big difference in our capacity to quickly return to price stability. bis central bankers ’ speeches

njuguna ndung ’ u : financial stability and financial inclusion keynote address by prof njuguna ndung ’ u, governor of the central bank of kenya, at the 5th joint cma / cbk / rba / ira board members retreat on collaboration among domestic financial sector regulators, mombasa, 13 october 2011. * * * chairpersons here present ; board members of financial sector regulators here present ; chief executive officers ; colleagues ; ladies and gentlemen : i am honoured by the invitation to address this gathering on financial inclusion and financial stability, an increasingly topical issue. at the outset, i would like to thank the retirement benefits authority for hosting this 5th joint retreat for the board members of domestic financial sector regulators. ladies and gentlemen : at a time like this, a pertinent question begs an answer : what does financial stability entail? while the concept cannot be easily captured in a single word, a few attributes need to be demonstrated for a given system to be described as financially stable. these include : public confidence and trust in the institutional framework – owing to sound design of the infrastructure ; predictability ; efficiency ; sound ethical behavior by market participants and competence of financial authorities, among others. to paraphrase, financial stability may be said to be present in an economy when the financial system functions as it is supposed to. financial stability in a given jurisdiction serves to instill confidence in users of financial services. it encourages and facilitates productive economic activities and thereby contributes to a society ’ s overall well - being and progress. the role of regulators, in this regard, has historically been to oversee financial stability using traditional performance indicators as a guide. these indicators include conventional performance measures such as the quality of assets in institutions, earnings and performance, liquidity and capitalization. ladies and gentlemen : in our country ’ s history, the kenyan financial sector has on a number of occasions undergone severe tests of its stability, involving failure of systemically important financial institutions, that have dented market confidence in our financial system. as regulators, we have a fiduciary role to maintain public confidence in the financial sector by addressing all factors that would undermine the sector ’ s long - term stability, without which it would lose its long - term relevance as a medium of economic interaction and payments system. maintaining public confidence entails ensuring that the sector keeps up with all pertinent global developments to ensure it remains relevant to the needs of the public from which it derives its mandate. ladies and gentlemen :