loans and deposits, has not always been successful in uganda, possibly because the operating costs have been too high. several of the mdis which were licensed in the 2000s have since been converted into commercial banks. mobile banking mobile banking was first introduced in uganda in 2009. the business model involves a partnership between a mobile phone operator and a commercial bank. the services offered have so far been restricted to basic retail payments and money storage services ; money can be transferred from one customer to another and it can also be stored in a customer ’ s virtual account. the main regulatory concern of the bou has been to safeguard customers ’ virtual money which they purchase, with cash, from mobile money agents. the bou has only allowed mobile money operations when this is done in partnership with a supervised commercial bank. mobile money operators have to hold, in an escrow account in their partner commercial bank, the equivalent in value of all the mobile money that they have sold to their customers. this means that the mobile phone operators, which are not licensed financial institutions, cannot themselves intermediate the funds that they have mobilised through the sale of mobile money. customers who purchase mobile money have a similar level of protection as that which is afforded to depositors in a commercial bank. the bou has also issued mobile money guidelines in 2013. the guidelines stipulate an approval process for all agents who wish to engage in the provision of mobile money services and the roles and responsibilities of all parties involved. they also stipulate the safeguards to protect bis central bankers ’ speeches customers, such as the requirement that customers ’ pin numbers must be used to authenticate all transactions. as can be seen in table 2, the growth in mobile banking has been phenomenal. the number of registered mobile money customers exceeds half of the total population of uganda, although this number may include some people who are registered with more than one operator. in terms of extending access to financial services, mobile banking has made a much larger contribution than any other recent innovation. the regular finscope surveys reveal that the share of the population with access to formal financial services increased from 28 percent in 2009 to 54 percent in 2014 and that almost all of this increase was due to access to mobile banking. however, although the growth of mobile banking amongst the previously financially excluded has been impressive, we should also bear in mind that the range of financial services available through mobile banking is very narrow ; as i have already noted it is restricted to basic payment transactions and storage of money. agent

12 countries that undertake textbook policies of financial sector liberalization are not immune to the inflows – indeed, stein, jeremy. 2012. monetary policy as financial - stability regulation. quarterly journal of economics 127, no. 1 : 57 – 95. see diamond and rajan ( 2012 ), farhi and tirole ( 2012 ) and acharya, pagano and volpin ( 2013 ). the problem is exacerbated if unemployment is driven by factors that move to a different cycle and pace than the financial cycle. see feroli, kashyap, schoenholtz, and shin ( 2014 ) for details. see stein ( 2013 ). see bruno and shin ( 2014 a, b ), calvo, leiderman, and reinhart ( 1996 ), obstfeld ( 2012 ), rey ( 2013 ), and schularick and taylor ( 2012 ) for example. see eichengreen and gupta ( 2013 ) and mishra, moriyama, n ’ diaye, and nguyen ( 2014 ). bis central bankers ’ speeches their deeper markets may draw more flows in, and these liquid markets may be where selling takes place when conditions in advanced economies turn. 13 macro - prudential measures have little traction against the deluge of inflows – spain had a housing boom despite its countercyclical provisioning. recipient countries should adjust, of course, but credit and flows mask the magnitude and timing of needed adjustment. for instance, higher collections from property taxes on new houses, sales taxes on new sales, capital gains taxes on financial asset sales, and income taxes on a more prosperous financial sector may suggest a country ’ s fiscal house is in order, even while low risk premia on sovereign debt add to the sense of calm. at the same time, an appreciating nominal exchange rate may also keep down inflation. the difficulty of distinguishing the cyclical from the structural is exacerbated in some emerging markets where policy commitment is weaker, and the willingness to succumb to the siren calls of populist policy greater. but it would be a mistake to think that pro - cyclical policy in the face of capital inflows is primarily a disease of the poor ; even rich recipient countries with strong institutions, such as ireland and spain, have not been immune to capital - flow - induced fragility. ideally, recipient countries would wish for stable capital inflows, and not flows