njuguna ndung ’ u : central bank of kenya ’ s new website – improving communication speech by prof njuguna ndung ’ u, governor of the central bank of kenya, at the official launch of the central bank of kenya ’ s new website, nairobi, 1 september 2009. * * * mr. mutua kilaka, financial secretary, ministry of finance ; dr. geoffrey mwau, economic secretary, ministry of finance ; dr. bitange ndemo, permanent secretary, ministry of information & communication ; board members here present ; distinguished guests ; ladies and gentlemen : you are all welcome to the launch of the new cbk website today. let me at this early juncture thank our chief guest, mr. mutua kilaka for accepting to launch our new website and to all our distinguished guests for joining the central bank fraternity in marking this occasion. ladies and gentlemen, it is important to note from the very onset that central banking has undergone dramatic changes in recent decades and many central banks now post and communicate their policies and forecasts in their websites. conventional wisdom in central banking previously held that monetary policymakers should say as little as possible and say it cryptically. in recent years, the understanding of central bank transparency and communication has changed dramatically. on its part, the central bank of kenya has employed a wide range of communication channels to ensure it efficiently and effectively communicates with the market as well as target audience. the launch of our new website today marks a major milestone towards the achievement of the bank ’ s vision of becoming a world class, modern central bank. our new website is also part of the bank ’ s communication strategy aimed at improving central bank communication platform and policy. ladies & gentlemen, central bank communication is important for financial market participants as it forms the basis for their extrapolations regarding current and future policy actions that might impact the value of their financial assets. so far, communication between the central bank and financial markets has worked fairly well. market participants have learnt over time to distinguish between information and “ noise ”. the central bank, on its part, has remained committed to provide markets with information while avoiding the “ noise ”. it has become increasingly clear to us that managing public expectations through effective communication is a central part of monetary policy and indeed, of central banking. this is an important aspect of formulating and communicating policy. public expectations are more likely to help foster economic stability when the public has a clear understanding of what the central bank

needs for the recovery to take root and to contribute to our citizens ’ well - being. * * * the road is undoubtedly proving to be a long and complex one. far behind us now is the summer of 2007, when the sub - prime mortgage crisis broke, spreading its risks across agents and markets through securitisations and credit derivatives. that episode, which did not initially impact spanish banks as they had no investments in those products, was actually the trigger for a chain of events and effects on the world economy and financial markets that would soon be felt in spain. the first symptom seen was the deterioration in financing and liquidity conditions. the authorities responded to this with support measures, such as the programmes for the purchase of financial assets and the backing of debt issues, and the european central bank set in place its new and ample liquidity provision criteria. in late 2008 the spanish economy went into recession. the decline in output and rising unemployment placed upward pressure on bank and savings - bank doubtful assets ratios and the subsequent need for loan loss provisions. this combined with the increase in financial bis central bankers ’ speeches costs owing to growing dependence on wholesale funding and to sudden difficulties on these markets. moreover, many institutions, highly concentrated in the real estate development and construction sector, were faced with the housing market grinding to a halt. what ’ s more, savings banks had a singular legal regime, associated with their legal status, that entailed clear limits on their ability to raise top - quality capital and to set in place the governance rules needed to retain the confidence of third - party investors as to their future. given this outlook, there was an evident need to restructure the sector and to support the process with an instrument that would help strengthen the solvency of those institutions that decided to pursue plans to improve their efficiency by means of mergers or other integration operations. in july 2009 the frob was duly created. and over the course of 2010 it granted – or committed itself to – aid amounting to €11. 6 billion for eight integration processes ( although one of these did not finally go ahead when the initial banco base project collapsed ) and for the restructuring of a non - viable institution, cajasur, and its integration into bbk. the other savings bank officially intervened due to its lack of viability, caja castilla - la mancha, received aid from the deposit guarantee fund, at a time when the frob had not yet been created. the year 2010 also saw