of four ( 4 ) commercial banks and others are in the process of joining. this development will go along way to enhance the payment system by facilitating customer payments for utilities and purchases using debit cards. licensing of the inter - bank switching system marks a significant step in bank of uganda ’ s efforts to widen the financial sector, which will result into the creation of a wider range of delivery channels to banks. as you are all aware continued efforts to improve efficiency and mitigate risks in the payment system resulted into the implementation of a number of initiatives including a real time gross settlement ( rtgs ) system known as uganda national inter - bank settlement ( unis ) in february 2005. as of now, about 80 % of large value and time critical payment transactions pass through the system leaving 20 % to pass through the traditional clearing system. likewise, to broaden the outlet and variety of institutions, which offer financial services, three new micro deposit taking institutions ( mdis ) were licensed in 2005 bringing the total number of licensed mdis to four. the significance of licensing mdis has far reaching impact on promoting the savings culture and thereby fostering the accumulation of funds for investment purposes. bank of uganda therefore encourages the council of the institute of bankers to initiate appropriate educational training programmes from which these new institutions can access information and expertise necessary for their future development. bank of uganda on its part will continue to promote the development of mdis through prudential regulation and supervision so that they conduct their businesses in a manner that ensures safety of depositors ’ funds. notwithstanding the above developments, the financial sector still continues to face new challenges in their operations including globalization, relatively high interest rates, frauds and forgeries and lately the energy crisis. with respect to globalization, this has resulted into a fast pace of technological advancements in products and systems deployed in the global markets. these technological advancements have dramatically diversified the risk profiles of financial institutions. to address this new development, bank of uganda has compelled all supervised financial institutions to institute credible risk management frameworks which can adequately identify, measure, monitor and control all risks inherent in financial institution business in a timely and ongoing manner. regarding the high interest rates charged on loans, although these have remained relatively stable in the last two years or so and while inflation has been maintained at single digits for over a decade, lending rates have continued to remain at high levels and at times as high as 26 % p. a in some banks. yet, the weighted interest rates on deposits continue to

data inc. and bank calculations. ( a ) previous peaks taken as : 1929 crash = 7 september 1929 ; 1973 oil crisis = 11 january 1973 and current crisis = 9 october 2007. months from peak sources : global financial data inc. and bank calculations. ( a ) previous peaks taken as : 1929 crash = 30 september 1929 ; 1973 oil crisis = 12 december 1972 and current crisis = 10 october 2007. kamstra, m and shiller, r j ( 2009 ), “ the case for trills : giving people and their pension funds a stake in the wealth of a nation ”, cowles foundation discussion paper no. 1717. chart 2 public sector interventions during the financial crisis ( a ) ( b ) per cent of gdp uk total uk investment us total us investment euro area ( c ) total euro area ( c ) investment aug. nov. feb. may. aug. nov. feb. may. aug. nov. sources : bank of england, bis, board of governors of the federal reserve system, ecb, fdic, hm treasury, imf world economic outlook ( october 2009 ), us treasury and bank calculations. ( a ) end - of - month data expressed as percentages of 2007 nominal gdp. ( b ) scale of interventions = potential size of packages when announced ( c ) original euro area 11 countries plus ecb interventions. chart 3 gdp developments during recent crises uk us chart 4 recent decline and rally in uk equity prices in an historical context uk financial equity prices uk equity prices sources : bloomberg, global financial data and bank calculations. chart 5 chart 6 changes in international equity indices since trough ( a ) european corporate bond spreads interest rates expected earnings implied risk premium total per cent basis points ( log scale ) illiquidity premium ( a ) 10, 000 compensation for credit risk ( b ) great depression ( c ) current ( d ) 1, 000 20 + 0 20 eurostoxx s & p500 ftse 100 current march current march current march current march current march sources : bloomberg, ibes, thomson datastream and bank calculations. ( a ) based on a three - stage dividend discount model. see panigirtzoglou, n. and scammell, r. ( 2002 ),'analysts'earnings forecasts and equity valuations ', bank of england quarterly bulletin ( spring ), pages 59 - 66. ( b ) taken as 9 march 2009. sources : citigroup, moody's investors service, ubs