traditional mismatch constraint therefore comes into play. this requires a well developed mortgage market to address longterm funding requirements of the sector. developing mechanisms for long - term finance is good for monetary policy transmission as well. the mpc has been trying to address the issue of long - term finance ; we do hope this forum can provide some viable and feasible options. ladies and gentlemen : the government ’ s commitment to growth of real estate sector is in our blueprint for vision 2030 and is also well articulated in the finance bill, 2010. the finance bill outlines a number of measures to spur growth in the property market. in particular, in order to facilitate provision of adequate housing to kenya ’ s growing population, the finance bill, 2010 contains proposals to amend the banking act : ( i ) to allow mortgage finance companies to operate current accounts ; and ( ii ) to allow banks to advance up to 40 % of their total deposit liabilities up from 25 % for purchase, improvement or alterations of land. these measures will unlock the sector ’ s potentials by availing funding required to finance growth of real estate in kenya. the central bank will continue to work with the sector to improve the operating environment. it is equally important for the players in the real estate sector to design innovative ways of securing funds to exploit opportunities available. for instance, pension funds are needed for guaranteeing members ’ mortgages. this is happening in kenya, but still at a low scale. leveraging on such long - term instruments will lower costs and make decent and low cost housing available to potential borrowers. also, other investment vehicles such as unit trusts have the potential of pooling funds required for specific projects. in addition, the success of the kenya government infrastructure bond as well as other corporate bonds that have followed, demonstrates enormous potential of the bond market. in 2009 alone the government raised a total of ksh 54. 7 billion through bonds issues, and the infrastructure bonds were oversubscribed every time. this is a clear testimony of the market ’ s ability to provide cheaper source of funding for long - term projects such as mortgages. to further deepen the bond market, the central bank has implemented a number of measures, including introduction of benchmark bonds and re - opening of these benchmark bonds to create liquidity and facilitate trading. we can then use this infrastructure bond platform to develop housing bonds. ladies and gentlemen : in all this, a vibrant financial sector with adequate and dynamic human capital is a vital

. the bsp will activate these tools as appropriate. in the context of pursuing our price stability mandate, the bsp will continue to fine - tune its implementation framework for monetary policy to make it even more market - oriented. we have already started with the deployment of the interest rate corridor ( irc ) system. over time, the irc is expected to aid in advancing the development of the domestic money and capital markets based on greater reliance on the use of market - friendly instruments. the irc will further align our open market operations with liquidity needs of the market, strengthening monetary policy transmission channels. in terms of banking supervision, we continue to review and align our financial regulations and policies with international standards to improve risk management as well as ensure the competitiveness of our banks in view of asean integration … we intend to further enhance our macro - financial surveillance capability by, among others, improving coordination and cooperation with other government agencies and regulators … we are also working closely with other government agencies and private sector stakeholders to accelerate the development of the domestic debt market, including the development of the necessary financial market infrastructures that provide orderly trading, clearing, and settlement of the full range of financial transactions. earlier last year, the monetary board approved the ninth wave of liberalization of foreign exchange rules. this is to encourage the public to transact their fx needs with banks, enhance market efficiency, and improve data capture. there are more ambitious fx reforms to come. we also continue to enhance and update our financial sector regulations and policies to bring our 4 / 5 bis central bankers'speeches financial system at par with international standards … through the financial stability coordination council committee ( fscc ) chaired by the bsp, macro - prudential surveillance of the financial system is conducted on an on - going basis to enable early detection of any incipient signs of instability. our surveillance toolkit consists of a suite of quantitative models that attempt to address one or more aspects of systemic risks. this includes, among others : early warning systems ( ews ) that employ aggregate information from various sectors to generate early warning signs of systemic stress and at the same time, allow us to identify potential build - up of stress in specific sectors of the economy. stress tests that measure the resilience of the domestic financial system to various stress factors, including shocks from macroeconomic and financial variables like gdp, liquidity, and interest rates. stability indicators that potentially contain more information on the changes in domestic macro - financial conditions such as philippine