emmanuel tumusiime - mutebile : corporate governance and banking regulation in uganda address by mr emmanuel tumusiime - mutebile, governor of the bank of uganda, to the kcb bank of board of directors retreat, kampala, 2 november 2012. * 1. * * introduction good corporate governance has become increasingly recognised worldwide as essential for the efficient functioning of market economies and to ensure that they function in the interests of the wider society, and not just those with power and wealth. the focus of corporate governance is the manner in which the business and operation of a firm is governed by its board of directors and senior management. at the core of corporate governance is the relationship between what are often termed the “ insiders ” of firms – dominant shareholders and senior managers – and the “ outsiders ” who include small shareholders, the creditors of the firm, its employees and customers and the general public. a key objective of corporate governance is to ensure that the insiders who control the management of a firm do not abuse their control and act in a manner which is detrimental to the interests of outsiders. good corporate governance is even more important for banks than it is for non financial firms, for two key reasons. the first is the much greater inherent opacity of the balance sheet of banks ; it is difficult for outsiders to evaluate the quality of the assets which a bank holds and, therefore, its true financial position. secondly, the potential negative externalities of bank failures are very damaging for the economy and for society, as was demonstrated vividly by the global financial crisis. corporate governance in banking has certain features which distinguish it from corporate governance in non financial firms. this is because of the unique characteristics of banks, in particular the fact they are very heavily leveraged and that most of their liabilities are owed to a large number of atomised depositors who have the most to lose from abusive or negligent management. consequently, a priority of corporate governance in banking is the protection of the interests of depositors. in addition, the corporate governance of banks attaches particular importance to the veracity of financial information. 2. bank failures in uganda and the reform of bank regulation in the 1990s and early 2000s, uganda ’ s banking industry suffered a number of bank failures. eight banks failed, forcing the bank of uganda ( bou ) to intervene and resolve them ; in some cases the failed banks were closed, in others they were sold to new owners. the primary cause of most of these

andrew bailey : the case for an open financial system speech by mr andrew bailey, governor of the bank of england, at the financial and professional services address, mansion house, london, 10 february 2021. * * * as we look forward – and for so many reasons we must look forward – it is important to focus on the future of financial services, and the important role they play in our economy and internationally. this will be my focus today. i am going to look forward with the benefit of history and context and set out why open financial markets are in the interests of all – home and abroad – and something we should always strive for. i want to start with the bretton woods agreement towards the end of the second world war. this was a fundamental and decisive commitment to an open world economy. this commitment did not come free at the time – the adjustment was hard for this country – and of course the more formal bretton woods system broke down in the 1970s. but that breakdown did not compromise the commitment shared broadly across nations to an open world economy. there have been times when the commitment has been sorely tested, but it has not been abandoned. what followed the breakdown was a shift of emphasis, not a free for all. the shift was towards managing the consequences of greater openness with much more emphasis on the stability of the financial system and its ability otherwise to do harm, both domestically and internationally. what was needed was not just openness, but safe openness. this emphasis was never more evident than during and after the global financial crisis. there was a moment at the height of the financial crisis when it might have been natural to consider forfeiting the commitment to an open financial system in the face of damaging international linkages. that did not happen to our great relief – the g20 nations stood firm to the principles of bretton woods and committed to significantly reforming the international financial system and its regulation, by raising global standards for regulating the system and reinforcing the institutional structure. the covid crisis has been the first big test of those reforms – and it has been a big test. the scorecard to date is encouraging – by no means perfect, but the core of the system has stood up well, which is needless to say a huge relief. in order to preserve this public good of an open world economy and now also an open financial system, has required a commitment to institution building both internationally and domestically. bretton woods created the imf and world bank,