at www. bankofengland. co. uk / speeches machine tool. a field currently producing barley, sold into the european market, can ’ t easily or as fruitfully be replanted with olive trees. someone steeped in one particular area of financial services cannot overnight, or costlessly, be reborn as an expert widget - maker, able to generate the same contribution to gdp. in the presence of specialised inputs a significant shock to relative demand can have coincident and material effects on aggregate supply. the general lesson here is that “ total factor productivity ” doesn ’ t just depend on aggregate resources. to the extent those resources are specialised it also depends on their allocation. i wondered some years ago whether such effects were at work after the financial crisis. given the potential reallocative effects of any material change in the uk ’ s trading arrangements, it ’ s conceivable they could arise in this case too. indeed it ’ s possible they could arise even ahead of the formal date of the uk ’ s departure. in september / october a cips survey of procurement managers suggested there could be significant unwinding of supply chains through the course of next year : 40 % of uk firms who currently use eu suppliers are actively looking for domestic alternatives ; the equivalent figure in the other direction – the proportion of european businesses expecting to move away from existing uk suppliers – is 63 %. a cbi survey in october found that, in the absence of a transition deal, 60 % of firms would begin to activate “ worst - case ” contingency plans by the end of march 2018, a full year before the uk ’ s exit. chart 3 : reductions in supply can add to it ’ s true that incremental changes in underlying inflationary pressure productivity can have knock - on consequences for wages, and for demand, that would blunt their impact on inflation. if in aggregate firms are less productive, they would probably spend less, including on pay awards. but to the extent those knock - on effects lag in any way, firms would also respond by raising prices. in other words, reductions in supply can add to inflationary pressure even as they also lower aggregate gdp. chart 3 is an extremely stylised description of this effect. broadbent ( 2012 ). all speeches are available online at www. bankofengland. co. uk / speeches divergences in expectations : why demand and the exchange rate can move independently let me now turn to the point

njuguna ndung ’ u : challenges in developing a successful bond market in kenya remarks by prof njuguna ndung ’ u, governor of the central bank of kenya, at the market leaders forum dinner, nairobi, 6 august 2013. * * * members of the market leaders forum, officials from the treasury, colleagues at the central bank of kenya, ladies and gentlemen, let me take the opportunity to welcome you all to this event which has been organized to take stock of our achievements for the year, review challenges encountered and develop the plans for the future. at the outset i wish to commend the market leaders for the effort and success in taking this market to a higher level. as you may be aware, kenya ’ s bond market is now regarded among the top and fastest growing in africa and this could not have been without the strong partnerships that we have continuously cultivated. we are however still a long way to achieve liquidity, market efficiency and stability. the 2012 – 13 financial year was a great success with respect to raising the borrowing requirement for the government. the market leaders forum together with market stakeholders contributed significantly to the success of the bond market in terms of the following : 1. successful financing of the fy 2012 – 13 borrowing plan : treasury ’ s target for the year was successfully achieved reflecting a sterling performance especially given that this was the highest in the history of domestic borrowing at kes. 165bn. 2. benchmark bonds program implementation : successful implementation of this program during the year was critical for addressing bond market fragmentation and increasing liquidity in the market. all 17 bonds valued at kes 209. 8bn issued in the year were benchmark tenors, out of which 5, worth kes 5. 4bn were issued through reopen auctions. overall, 16 benchmark bonds have been reopened since 2009 when the strategy was first employed, bringing into the market more than kes. 183 billion and providing critical financing for the country ’ s fiscal gaps. 3. longer maturity profile of domestic debt : average maturity profile of government bonds in the debt portfolio rose to 7. 3 years by end june 2013 compared to 6. 2 years at the beginning of the year. these are encouraging outcomes given that in 2001, the average maturity of all government securities was about 8 months. this is indeed a reflection of the continued success in reducing rollover risk associated with short term debt which is essential for a well - functioning secondary market for bonds. 4. global recognition