least a couple of years would be needed to ensure a smooth transition to introducing the euro in sweden. one factor contributing to the relatively long time lag was the complexity and old age of some of the it - systems involved. in this respect i believe uganda has a twofold advantage. first, the economy is relatively less dependent on electronic money and, second, the technological infrastructure is of a much younger date. the other side of the coin, if you will pardon the pun, is tangibles such as notes and coins. here, authorities must ensure that enough time is given for production as well as distribution of the new currency. in a cash - based economy this will of course take relatively longer to prepare. overall, the change - over preparations are less of a concern for the general public. what the average citizen usually finds most difficult is to get accustomed to the new unit of account. on the other hand, all companies, private and public owned alike, as well as government bodies, must prepare thoroughly for the transition. after implementation of a monetary union the main challenges after forming a monetary union are how to preserve stability and promote efficiency. with regard to efficiency, the message under this heading is very much in line with the previous one ; since presumably no market functions perfectly there will always be room for improvement concerning flexibility and integration. however, given that certain markets can be more politically sensitive than others, we must recognize that such changes can take considerable time to implement. the view on stabilisation policy as such does not change because of the creation of a monetary union. in general, normal swings in the business cycle are counteracted by automatic stabilisers in the public budgets that dampen oscillations. as the experiences from active fine - tuning are discouraging, the primary aim of active stabilisation policy should be to counter the occurrence of unduly large asymmetric cyclical fluctuations. overall, the trend in monetary policy towards price stability targeting has brought down inflation virtually around the globe and thus one necessary condition for macroeconomic stability has been fulfilled. when discussing the role of fiscal policy, the analysis is facilitated through addressing the roles of the monetary union and the individual country separately. stabilisation policy from a union point of view viewing the monetary union as a whole, the euro area can serve as an illustrative example on a couple of aspects. firstly, the common fiscal budget is very small in comparison with national fiscal budgets. on political grounds, member countries are

or membership of a monetary union. however, although important, these developments are admittedly slow and differences in the end - result should not be exaggerated. i merely intend to suggest that the transition in stabilisation policy that comes with joining a monetary union perhaps is not as large as it first seems. central banking has a long history and although it has been confronted with many changes in the past, it has far from lost its importance, if anything rather the contrary. basic functions, for a recent study of business cycle synchronisation, see kose, otrok and whiteman ( 2005 ). such as aiding financial intermediation through large value payment systems and acting as a lender of last resort, will remain important in the future as well. needless to say, it will be very interesting to follow the transformation of eac in general and the role of the bank of uganda in particular. references annett, a., ( 2006 ), “ enforcement and the stability and growth pact : how fiscal policy did and did not change under europe ’ s fiscal framework ”, imf working paper, no 06 / 116. baldwin, r., ( 2006 ), “ in or out : does it matter? - an evidence - based analysis of the trade effects of the euro ”, centre for economic policy research. baldwin, r., skudelny, f. and taglioni, d., ( 2005 ), “ trade effects from the euro – evidence from sectoral data ”, ecb working paper series, no. 446. boije, r., borg, a. and eklund, j., ( 2002 ), ” the riksbank ’ s statement regarding the report ’ stabilisation in the monetary union ’ ”, sveriges riksbank economic review, 2002 : 4, pp. 90 - 127. boije, r. and shahnazarian, h., ( 2003 ), “ national stabilisation policy for sweden in stage three of emu ”, sveriges riksbank economic review, 2003 : 1, pp. 18 - 49. borio, c. and filardo, a., ( 2006 ), “ globalisation and inflation : new cross - country evidence on the global determinants of inflation ”, mimeo, bis, basle. bower, u. and guillemineau, c., ( 2006 ), “ determina