in placing sale and buy trade orders. iv. cash settlement of all trades through this system will take place through the kenya electronic payment and settlement system ( kepss ) also known as real time gross settlement ( rtgs ) domiciled at the central bank of kenya. v. the trading process will be premised on a delivery versus payment ( dvp ) arrangement. vi. transactions settlement cycle will be at t + 3, but parties can opt to shorten this period. it is our sincere hope and expectation that the roll out of automated trading for treasury bonds, together with the recent automation of corporate bond trading, will mark the turning point for trading of fixed income securities at the bourse. this also comes at a time when re - opening of benchmark bonds has been very successful, creating adequate liquidity around each bond. this fits in very well with the roadmap for capital markets development as envisaged in vision 2030. 4. recent trading developments i am pleased to note that since the roll out of this new system on 27th november, 2009, the market has witnessed renewed interest and enthusiasm from bond traders. as of today, we have recorded 11 completed trades totaling kes. 1. 72 billion and 16 trades totaling to kes. 2. 235 billion are at various stages of processing. as we successfully move away from the manual / open outcry method of trading in treasury bonds to the new system, we expect to see more activity in this segment of the market. we trust that market players will carry out their functions professionally, observing the highest standards of integrity and transparency so that the investing public can reap full benefits arising from the same. we at the central bank will continue to review the operations of the system and related processes to ensure that it meets the expectations of investors and conforms to best practice in the market. 5. appreciation finally, may i take this opportunity to thank all stakeholders and members of the ats technical committee for working tirelessly to ensure that the project succeeds. thank you all for your attention.

come to interesting conclusions, but the most important is policy coordination. why is policy coordination important? • monetary policy is about short - run decisions on the direction of prices, and affects nominal variables ; while fiscal policy affects real variables. • it makes it easier for policy makers to achieve their stated policy objectives in a coherent and efficient manner. bis central bankers ’ speeches • ensures commitment to mutually agreed upon objectives, thus helping to eliminate the problem of time inconsistency in the design of policy. • it enhances the credibility, anchors public expectations, ensures sustainability of fiscal and monetary policies, thus promoting macroeconomic stability. ladies and gentlemen, to ensure success of policy coordination we need either of the following : • a continuous interaction between the fiscal and monetary authorities to decide jointly on aspects relating to policy design and implementation, or ; • a set of rules and procedures that minimize the need for frequent interaction. but we know all these, why was the eu zone not successful? as noted by sargent and wallace in their famous article “ some unpleasant monetarist arithmetic ”, “ tighter money today leads to higher inflation not only eventually but starting today ”. the paradox for tight monetary policy and heavy debt expansion will lead to economic stagnation, eddie buffie has demonstrated this for a number of countries in this region. moreover, ladies and gentlemen, the lack of credibility of the overall policy framework caused by the long - term inconsistency of such mix in signals diminishes the effectiveness of monetary policy. our experience with fighting inflation in kenya suggests that inflation may be occasioned by demand side as well as supply side factors. monetary policy uses interest rate as an instrument to fight inflation and anchor inflationary expectations. fiscal policy on the other hand raising debt domestically and using a mix of debt instruments drives the domestic interest rate structure. how policy makers coordinate and consolidate their efforts not only affects expectations concerning future policies and outcomes but can also affect the outcome of economic activity. ladies and gentlemen, several papers that link fiscal policy, monetary policy and inflation have been lined up for presentation today. as you listen to the presentations and the discussions, it is important that we filter the conclusions first to reach to the frontier of this subject matter and provide renewed thinking in the policy arena. the recommendations of these papers should fit in the policy dialogue and policy making process to support growth and employment as envisaged in vision 2030 in kenya. as i conclude, i would like to thank all the participants present. i hope