and rate of change of the exchange rate. the exchange rate is of crucial importance for low income economies for at least three reasons. first, these economies generally exhibit a strong and rapid pass through of exchange rate movements to domestic prices. volatility in the nominal exchange rate imparts volatility to domestic inflation. in mid 2011, a very sharp fall in the nominal exchange rate against the dollar, by 18 percent in three months, made a large contribution to the acceleration of inflation in the third quarter of that year ; this is not an experience we wish to repeat. secondly, exchange rate volatility is very disruptive for firms which have to transact in foreign exchange markets. thirdly, an overvalued real exchange rate is damaging for the competitiveness of traded goods industries and discourages private investment in these industries, which in turn retards long term economic growth and development, as a large volume of research, including research by imf staff, has demonstrated. the approach that we have adopted at the bou is to dampen short term volatility in the nominal exchange rate through sterilized intervention in the interbank foreign exchange market ; i. e. sales or purchases of foreign exchange accompanied by secondary market operations to keep the stance of monetary policy ( the interest rate ) unchanged. our experience shows that sterilized interventions can be effective in influencing the exchange rate. for example, when the exchange rate was depreciating very rapidly in the last few days of february following announcements by donors that they would suspend aid, the bou intervened and was able to stem the depreciation. the effectiveness of sterilized intervention most probably arises from portfolio balance effects in the context of imperfect capital mobility. we also attempt to lean against prolonged overvaluation of the real exchange rate, also using sterilized intervention. however, there are constraints on the extent to which this is practically feasible. sterilization to stem appreciation involves the issuance of domestic securities to mop up the liquidity created by foreign exchange purchases, which requires that the central bank must have a sufficient quantum of securities at its disposal for this purpose. it is also expensive for the central bank because of the large interest rate differential between domestic currency securities and the assets in which the central bank holds its foreign currency reserves. in uganda this differential is currently about 11 percentage points. the speed of transition to itl i would like to make a brief comment about our experience with regard to the speed of transition

bostjan vasle : introducing the euro in times of high inflation - case of croatia opening speech by mr bostjan vasle, governor of bank of slovenia, at the lecture " introducing the euro in times of high inflation - case of croatia ", ljubljana, 20 april 2023. * * * the spoken word applies. dear ladies and gentlemen, dear guests, welcome to the second lecture of foreign central bank governors this year. after hosting the governor of the central bank of estonia in march, today we have with us the governor of the croatian national bank, boris vuji. just a few months after croatia became the 20th country to join the euro area, governor vuji will present croatia's path to and the first experiences with adoption of the euro. with croatia's entry into the euro area this year, the euro has become the official currency for 347 million people. euro area enlargement adds to the role of the euro and the european economy, which is particularly important at a time of increased geopolitical tensions. the euro remains the second most widely used currency for trade invoicing, crossborder lending and foreign exchange trading, and holds the second largest share of global foreign exchange reserves, after the us dollar. even at a time of high inflation, support for the single currency among the eu population remains high, at over 70 % according to this winter's eurobarometer. with support at 87 %, slovenians are among the biggest supporters of the euro. * * * while we can draw several parallels between the introduction of the euro in slovenia in 2007 and in croatia this year, there are also some interesting differences. ( i ) slovenia was the first of the so - called new eu member states to adopt the euro. the introduction of the euro was accompanied by broad support in politics and the professional community, which contributed to an exceptionally high 72 % acceptance of the euro among the population. 1 / 3 bis - central bankers'speeches the fact that slovenians, as savers and consumers, were well familiar with the euro also boded well. in addition, it is worth highlighting the importance of thorough tree - year preparations for the euro adoption, in terms of technical, managerial and communication aspects. in croatia, there were more divisions and doubts about euro adoption, which made the determination and public engagement of the central bank and the government even more significant. ( ii ) for slovenia, one of the major challenges in meeting the criteria for joining the euro