compliance with legal and regulatory requirements. this is why there is a shift in emphasis towards appointing non - executive and independent directors, who are people who are not part of the management team of the company. these directors are supposed to act as an independent check on corporate management. the role of a corporate board of directors has become technical and demanding and hence directors are required to have business and technical expertise. they must be able to understand the nature of the firm ’ s business, its financial performance and the risks facing the firm. i should add that the responsibility of directors today carries serious personal and collective liabilities. to maintain public confidence, companies must demonstrate a strong commitment to the development and enforcement of rigorous standards of corporate governance. these standards must encompass the relationship between a company ’ s board of directors, its bis central bankers ’ speeches management, and its shareholders. they must require corporate leaders to be faithful to shareholder interests and act with both competence and integrity. corporate governance has become the sine qua non for any business which cares about its reputation. the various scandals i noted earlier have been a loud wake - up call, focusing attention on the need to strengthen corporate governance, to improve accountability, transparency and control. in response, a number of measures have been taken or proposed by various countries to improve corporate governance, such as the sarbanes oxley act in the united states. in uganda, the financial institutions act ( fia ) 2003, includes an entire chapter devoted to corporate governance. in addition, the bou has issued additional corporate governance guidelines for the financial sector. the companies act 2012 ( chapter f ) also reinforces corporate governance. good intentions do not always prevent unintended consequences – which is why a forum such as this one can be very helpful in illuminating the potential pitfalls of well - intended corporate governance proposals. some unintended side - effects might include high compliance costs, ambiguous liabilities, or reduced innovation. it is counterproductive to make disclosure so onerous as to make the cost of compliance prohibitive or impractical. regulations and standards, whether by regulators, government, trade groups, or the companies themselves, should not impede the ongoing process of innovation. rather we must ensure an environment that is conducive to effective and efficient operations. a credible case can be made that we should focus on principles as the bedrock for rules. we should establish key principles against which corporate decisions should be evaluated, regardless of whether or not a certain type of behavior is

of our securities portfolio without increasing its size. the fomc has indicated that it will continue purchases until it observes a substantial improvement in the outlook for the labor market in a context of price stability. the committee also stated that in determining the size, pace, and composition of its asset purchases, it will take appropriate account of their likely efficacy and costs. in other words, as with all of its policy decisions, the committee continues to assess its program of asset purchases within a cost - benefit framework. in the current economic environment, the benefits of asset purchases, and of policy accommodation more generally, are clear : monetary policy is providing important support to the recovery while keeping inflation close to the fomc ’ s 2 percent objective. notably, keeping longer - term interest rates low has helped spark recovery in the housing market and led to increased sales and production of automobiles and other durable goods. by raising employment and household wealth – for example, through higher home prices – these developments have in turn supported consumer sentiment and spending. highly accommodative monetary policy also has several potential costs and risks, which the committee is monitoring closely. for example, if further expansion of the federal reserve ’ s balance sheet were to undermine public confidence in our ability to exit smoothly from our accommodative policies at the appropriate time, inflation expectations could rise, putting the fomc ’ s price - stability objective at risk. however, the committee remains confident that it has the tools necessary to tighten monetary policy when the time comes to do so. as i noted, inflation is currently subdued, and inflation expectations appear well anchored ; neither the fomc nor private forecasters are projecting the development of significant inflation pressures. another potential cost that the committee takes very seriously is the possibility that very low interest rates, if maintained for a considerable time, could impair financial stability. for example, portfolio managers dissatisfied with low returns may “ reach for yield ” by taking on more credit risk, duration risk, or leverage. on the other hand, some risk - taking – such as when an entrepreneur takes out a loan to start a new business or an existing firm expands capacity – is a necessary element of a healthy economic recovery. moreover, although accommodative monetary policies may increase certain types of risk - taking, in the present circumstances they also serve in some ways to reduce risk in the system, most importantly by strengthening the overall economy, but also by encouraging firms to rely more on longerterm funding, and