economy continued to grow at a moderate pace although this varied considerably from one region to another. the emerging economies were still making a major contribution to global growth. by contrast, overall momentum in the advanced economies was subdued, although here, too, differences from one country to another were considerable. japan experienced strong growth in the first quarter due to a catch - up effect. in the us, momentum was moderate. in the euro area, a number of countries are in deep recession, while in germany, gdp continued to expand strongly. overall, the economy in the euro area stagnated. as in the last monetary policy assessment, we assume that the global economy will continue to recover slowly. this will be driven by globally expansionary monetary policy and strong domestic demand in the emerging economies. in the euro area and the us, developments are likely to be more subdued. here we assume that the european financial and sovereign debt crisis will gradually ease. however, risks in this respect remain high. in particular, the difficult situation in greece and spain has already led to a significant deterioration in the bis central bankers ’ speeches confidence of households and companies in the euro area. as a result, the economic situation remains vulnerable. these high risks are also affecting the financial markets. following a temporary recovery at the beginning of the year, the situation on the financial markets at present is again tense. a substantial correction has taken place on the share markets. by contrast, investments perceived to be safe, such as us, german or uk government bonds, recorded all - time low yields and correspondingly high price gains. real yields on these investments are in negative territory for most maturities, measured in terms of inflation expectations. in addition, interest rates on money markets are at record - low levels worldwide. swiss economic outlook in switzerland, real gdp rose faster than expected in the first quarter. the stabilising effect of the minimum exchange rate against the euro played a major role in this development, with goods exports declining only slightly in the first quarter, in an international environment that remained weak, while exports of services rose. an improvement in consumer confidence encouraged a substantial increase in private consumer spending. however, gdp growth was also supported by temporary effects. value added in the banking industry benefited from the optimistic mood on the financial markets during the first months of the year. in manufacturing and the hospitality industry, however, activity declined, underscoring the particularly negative impact of the strong swiss franc on these industries. for the second quarter, we expect

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