njuguna ndung ’ u : workshop on the compilation of banking statistics in kenya address by prof njuguna ndung ’ u, governor of the central bank of kenya, at the opening of the workshop on the compilation of banking statistics, kenya school of monetary studies, nairobi, 12 june 2007. * * * mr. kevin o ’ connor, consultant imf mr. oliver chinganya, regional advisor, gdds project the representatives of : kenya banker ’ s association ( kba ), institute of certified public accountants of kenya ( icpak ) and central bureau of statistics distinguished participants, ladies and gentlemen, let me first and foremost welcome you all to the kenya school of monetary studies and to this very important workshop on the compilation of banking statistics. i must thank you for taking time off to attend this function. i wish to thank the imf consultant in particular for finding time to participate in this workshop as a resource person. as you may be aware, the imf has played a major role in the development of monetary statistics in kenya and in countries around the world. in particular, the fund, in collaboration with the department for international development ( dfid ), continues to support the general data dissemination system ( gdds ) project which aims at improving the availability and quality of data in developing countries to conform with international standards. kenya, as a country, being part of the gdds project, provides an important avenue for database improvements. this workshop is therefore part of the greater plan towards the improvement of statistics in kenya with the support of these organisations. i thank them for this contribution. ladies and gentlemen, my task today is to open this workshop but before i do that let me draw your attention to the importance of this workshop and statistics in general. you will recall that the financial crisis that hit the asian economies in the early 1990s was partly occasioned by lack of sufficient statistical information on what was going on in the banking system. i am glad therefore that thereafter, the world economies have taken initiatives to ensure that statistical capacities and developments are at the forefront so as to inform decision making at all levels. we at the central bank have not been left behind. over the past few years, the bank has been working on the improvement of monetary and financial statistics to meet the international compilation standards guided by the recommendations of the imf mission on report for observance of standards and codes ( rosc ), and plans for improvements under the gdds project

of them being the south african rand. at the time, this brought the number of currencies being settled through the cls system at the end of 2004, to fifteen. this achievement ensured the integration of the domestic financial market infrastructure to the international system that enables our local participants to benefit from the risk reduction opportunities offered by the cls system. we are aware that while none of the other brics countries have joined the cls, they are currently in the process of joining the cls system, although they are at different stages in the process. such initiatives, when implemented, will provide a platform for transactions among the brics countries to be undertaken in a safe and efficient manner and will help facilitate the many initiatives underway in the brics and the achievement of our objectives. another major project which is currently underway is the integration of the payment systems in the southern african development community ( sadc ), so as to create a regional financial market infrastructure. the approach adopted in this process is to implement the desired infrastructure on a small scale, initially linking a few countries and thereafter rolling it out to more countries in a controlled manner. this will go a long way in facilitating trade within the region. international standards are adopted in this process to ensure that where appropriate in the future, the regional financial market infrastructure is enabled to integrate with other market infrastructures in other regions as well as internationally. it is envisaged that this infrastructure could be launched for testing as early as 2013. it is imperative that domestic financial market infrastructures are developed with due consideration of international standards and best practice. this will enable integration with those operated by other countries and / or regions and thus facilitate cross border trade. financial market infrastructures should endeavour to meet the highest standards of security, availability and operational effectiveness in order to retain the confidence of its users. in this regard, reputational risk is key in maintaining a high level of confidence and trust in the system. fx settlement risk is the risk that originates once a currency has been irrevocably paid by one party, and thereafter the counterparty fails to meet its obligation in the trade. bis central bankers ’ speeches there are, however, challenges that need to be managed in the development of a financial market infrastructure. some of these relate to striking a balance between interoperability and innovation. it is an accepted fact that interoperable systems are effective and convenient for their users. on the other hand, during the early stages of innovation, it is difficult to also meet