njuguna ndung ’ u : financial sector collaboration opening remarks by prof njuguna ndung ’ u, governor of the central bank of kenya, at the breakfast meeting for domestic financial sector regulators, nairobi, 31 august 2009. * * * hon. deputy prime minister and minister for finance board members and chief executive officers of rba, cma and ira, distinguished guests, ladies and gentlemen : it is my pleasure to be with you this morning and i am indeed honored to be accorded this opportunity to give brief remarks at this important breakfast meeting where the domestic financial sector regulators will be signing the memorandum of understanding ( mou ) on financial sector collaboration. at the onset, allow me to extend my gratitude to the hon. deputy prime minister and minister of finance for agreeing to grace the ceremony and deliver a key note address. in the same token, let me take this opportunity to recognise the work of the technical committee on collaboration which has been instrumental in organising the event. ladies and gentlemen, the monetary affairs committee is a caucus of central bank governors under the east african community monetary union which is mandated, among others, to harmonize regulatory regimes and supervisory frameworks in the region in the banking sectors. during the 12th monetary affairs committee ( mac ) governors ’ meeting held in kigali, rwanda in may 2009, my fellow governors and i celebrated the execution of the mou amongst the five central banks, which was put into effect in early 2009. it was indeed pleasing for governors to note that the bank of uganda had already signed an mou with other domestic financial sector regulators in uganda. other mac governors were therefore urged to implement a similar arrangement with their respective domestic regulators by june 2010. this is to demonstrate that collaboration amongst domestic regulators is in line with regional aspirations. consequently the celebrations that we mark today will enable cbk achieve a milestone set by mac governors ahead of the set time of june 2010. i cannot thank my fellow domestic regulators enough. but for the kenyan side, let me commend rba and edward odundo for the time and effort he has put on this initiative. as you are aware, there has been increased integration of economic and financial markets globally. globalization is creating new business opportunities and opening new markets. however, the forces of globalization and the ensuing competition are prompting financial companies to engage in business operations that make group management and risk aggregation more challenging. similarly, a new concept of cross - ownership and trading is emerging in our market, thus blur

##clical effects of credit market developments and the treatment of risk embedded in structured products held for trading is also warranted. the deposit guarantee schemes, in the light of recent events, also need to be revisited. this is a piece of advice i would most urgently give to the authorities of this country with its unfunded dgs. last but not least if there is one major lesson recent market developments have clearly shown, it is the shortcoming of a prudential framework which sidelines the central bank. cooperation at international level is only as good as cooperation at domestic level. liquidity issues cannot be segmented between an fsa and a central bank with no contacts of an institutional nature. with this personal remark for domestic consumption i thank you for your attention.