complex or too important to fail. see e. g. adrian and shin ( 2010 ) : “ the changing nature of financial intermediation and the financial crisis of 2007 – 09 ”. see e. g. shin ( 2012 ) : “ global banking glut and loan risk premium ”. see e. g. acharya, schnabl, and suarez ( 2010 ) : “ securitization without risk transfer ”. see e. g. haldane ( 2010 ) : “ the $ 100 billion question ”. bis central bankers ’ speeches in a market environment where the price of a bank ’ s own debt funding is insensitive to the risks the bank takes and decreases with the bank ’ s size, the bank has a strong incentive to further increase its leverage by taking on even more debt and continue to grow in size. the implicit subsidies also have important implications for the level - playing field in the banking sector. currently, the competitive distortions, manifested in differences in funding costs between systemically important banks and other banks, are significant. however, our goal must be that no bank is perceived as too big to fail. as stephen cecchetti recently noted, “ there should come a day when the basel committee ’ s list of globally systemically important banks, or g - sibs, is blank ”. 7 lack of a systemic aspect there was clearly also a lack of a sufficient macro - prudential aspect to banking supervision and regulation prior to the crisis. the fundamental problem is that banks themselves do not have an incentive to fully internalize the social cost stemming from their own contribution to system wide risks into their business decisions. 8 in the absence of substitutive regulatory and supervisory measures in the years preceding the crisis, systemic risks built up in the form of ever larger, more complex and more leveraged financial institutions. regulatory response to the crisis what has already been done? in response to the crisis, a number of international and eu wide regulatory reforms have been launched. two reform areas have been particularly relevant to the work of the high - level expert group ; capital adequacy and liquidity requirements ( basel iii as implemented in the eu through the crd iv / crr ) and recovery and resolution ( as in the commission ’ s proposal ). if effective, the new and still evolving capital adequacy requirements can go a long way to reduce incentives to take excessive risks across different banking operations and the use of excessive leverage

concentration on both the loans and deposit sides. large exposures represent 44 % of all loans, with loans to the largest five borrowers accounting for 24 % of total loans. on the deposit side, the largest five depositors account for 21 % of all deposits. this level of concentration poses a risk to the safety and soundness of banks. to deal with this threat, i will not hesitate to use the powers conferred upon the bank of uganda by the financial institutions act 2004 to force a reduction in loan concentration. let me now review a number of recent initiatives which are designed to increase the efficiency of the banking system. the national payments system : the bank of uganda has established a real time gross settlement system in uganda in abbreviation referred to as the rtgs. the rtgs is an inter - bank credit transfer system in which large payments and time - sensitive payments are settled immediately ( real time ) and individually ( on a gross basis ). the rtgs system has advantages of : • doing away with the long clearing cycles for traditional settlement instruments • strengthening the management of risk in payment systems • promoting economic efficiency and competitiveness through expeditious transfer of funds, and • enabling bank of uganda to improve the efficiency of management of monetary policy through timely availability of data on the stock of money flows in the financial system. from the foregoing, the rtgs system is a critical national infrastructure that will promote macroeconomic stability and the further development of the financial sector. the rtgs went live on 21st february 2005 and is now fully operational. the performance of the uganda national inter - bank settlement system in its first week of operation has been outstanding. on its first day of implementation, 86. 4 % ( i. e. nearly ugx 220 billion ) of the inter - bank payments that were settled at bank of uganda were channeled through the unis system. such a level of performance on the first day of operation of an rtgs system is unusual. in the first five days, the transaction value throughput of the unis system averaged 70 % of the total value that was settled at the bank of uganda. the system has also registered a 100 % availability rate since its implementation on 21st february 2005. we have also undertaken a number of initiatives to develop and modernize the value ( retail ) payment systems. in may 2002, bank of uganda, working closely with uganda bankers ’ association, implemented the electronic cheque clearing system. the electronic cheque clearing project automated cheque clearing and also