the drought having abated, headline inflation has fallen by 2. 5 percentage points over the last five months to 4. 8 percent in october 2017, while annual core inflation was only 3. 5 percent in october 2017. the improving outlook for inflation allowed the bank of uganda to further lower the policy interest rate – the central bank rate – to 9. 5 percent in october. the current year is probably best characterised as a period of financial consolidation for the banking industry. at the end of 2016, one of the largest banks in uganda – crane bank – had been taken into the statutory management of the bou and the banking industry as a whole was struggling with high levels of non - performing loans and low profitability. we were able to resolve crane bank successfully, without any loss to its depositors, and without any contagion to the rest of the banking system. public confidence in the safety of depositors ’ funds has been maintained. i believe that this is testimony to both the underlying financial strength of the ugandan banking industry and the efficacy of our bank resolution framework. two aspects of this resolution framework are especially worthy of mention. first, the financial institutions act, 2004 mandates the bank regulator to undertake prompt regulatory interventions to stem the losses of failing banks before depositors ’ funds are eroded. second, the bou has successfully utilised purchase of assets and assumption of liabilities transactions to minimise the disruption to the depositors and other customers of failed banks. over the course of the first nine months of 2017, the financial soundness indicators of the banking system have improved. the non - performing loan to total loan ratio has fallen from 10. 5 percent in december 2016 to 7. 2 percent in september 2017 ; and in absolute terms, npls fell by 32 percent. over the same period, the total capital adequacy ratio of the banking system increased from 19. 8 percent to 23. 8 percent of its risk weighted assets. strong capital buffers are of particular importance in bolstering the resilience of banks to adverse shocks. as i noted earlier, 2017 has been a year of consolidation, especially in regard to bank lending, with gross loans and advances increasing by a mere 1. 8 percent in the year to september 2017. i hope that the downward trend in npls and the reduction in the policy interest rate will encourage banks to ease their lending policies and thereby enable an acceleration of credit growth in 2018. a crucial problem which needs to be addressed if banks are to

drawn up, accounting for approximately 85 % of euro area bank assets. 15 of these are spanish groups, representing around 90 % of the assets of our country ’ s deposit institutions. it should be borne in mind that when we talk about 120 groups, we are referring to consolidated groups ; that is to say, the number of individual banks is far higher. in total there are 1, 244 individual institutions, which is essentially explained by the importance of cooperative banks in certain euro area countries, in particular france, the netherlands, austria and finland. to directly supervise the significant banks, the ecb has created two directorate generals, which shall perform the continuous monitoring of the 120 groups. dg i will supervise the 30 biggest banks in terms of balance sheet and activities, while dg ii will cover the remaining 90 significant banks. however, the supervision of specific aspects or matters, what is known as on - site inspection, will be carried out by different teams. the ecb has thus adopted a different model to that place at the banco de espana to date : functionally separating the continuous monitoring of banks and inspection visits. the centrepiece of the supervision of significant banks will be the joint supervisory teams, responsible for the day - to - day oversight of these banks. these teams will be made up of specialists from the ecb and from the national authorities, under the leadership of a coordinator designated by the ecb, and a sub - coordinator designated by the national supervisor. approximately 75 % of those making up the teams will be drawn from and designated by the national supervisors ; in the case of spanish banks, it will of course be staff from the banco de espana. inspection visits to significant banks, what is known as on - site inspection, will continue to be conducted by the national authorities, and their results will be passed onto the ecb for the adoption of the appropriate measures. with regard to the less significant banks, national authorities will continue to directly supervise them as they have to date. over 3, 600 banks across the euro area are involved here. the ecb will define common practices and criteria, it will monitor the actions and position of these banks and it will always be entitled, if it considers it necessary, to re - claim direct supervision over any of these banks. bis central bankers ’ speeches the competences and responsibilities of the banco de espana in the framework of the new mechanism i would now like to address the competences and responsibilities of the banco de espana, as a national supervisor, under