, came the covid - 19 pandemic that has dominated global discourse over the last eighteen months. unlike the global financial crisis that was largely an advanced economy phenomena, covid - 19 has extended its damage across the world. it has upended global lives and livelihoods and literally left no one unscathed. but amidst the gloom and doom, human resilience powered by digital platforms has shone through. in africa, the digital rails built on mobile phones have served us well, enabling official and personal transfers to the most vulnerable segments of our population including women, youth and micro, small and medium enterprises ( msmes ). our financial institutions, governments and businesses have pivoted to digital platforms to adapt to the new normal occasioned by the pandemic. in the kenyan banking sector for instance, transactions outside bank branches have increased from 91 percent before the pandemic to over 96 percent currently. significantly, the number of bank transactions on mobile phones has increased from 56 percent to 85 percent of all transactions. as digitalization democratizes and transforms financial services to anytime anywhere access by 1 / 3 bis central bankers'speeches customers and new business models emerge, regulators must adapt to the new terrain. at the central bank of kenya ( cbk ), our regulatory philosophy has evolved to maximizing the opportunities presented by technology and innovation while minimizing the risks. this requires an agile approach on our part which is the focus of our deliberations today. this leads me to the question of what does agile regulation mean? allow me to highlight three broad directions to set the stage. first, regulators need to walk with the innovators. reflecting back on the introduction of mobile phone financial services, we at cbk adopted a test and learn approach that sought to understand the business models, risks and their mitigants. this approach later developed across the world through the sandbox approach. financial services are moving from an institution - based approach to an ecosystem approach with incumbent regulated institutions at the centre. agile fintechs are key partners in the ecosystems to provide cutting - edge innovations such as credit scoring and customer relationship management solutions based on artificial intelligence. regulators must seek innovative approaches to understand these fintechs, mentor them and grow their risk management capabilities. in this regard, cbk partnered with the monetary authority of singapore ( mas ) in 2019 to launch the afro - asia fintech festival to create a collaborative platform for african and asian fintechs and regulators. on the back of this

per cent in 2020, rose to 3 per cent in 2021 and then accelerated again in the first half of 2022 to 7. 5 per cent [ figure 2 ]. today, it is close to 10 per cent. from a qualitative point of view, figure 2 suggests that there is a correlation between the divisia m331 monetary aggregate and inflation, with the former preceding the latter ; however, this correlation is uneven and has broad variations, and it is not obvious how these variations should be treated analytically in this context. to provide some exploratory evidence, the colleagues who helped me prepare these notes have plotted a pair of correlograms in figure 3 showing the co - movement of inflation and growth in the divisia m3 monetary aggregate for two different sub - periods. they confirm both the existence of a correlation a substantial part of the asset purchases under the app and the pepp did not directly involve the portfolios of households and firms, and a large part of the increase in reserves is linked to refinancing operations, specifically t - ltros. divisia monetary aggregates combine monetary sub - components based on their transaction services. specifically, sub - components are weighted by their yields, which are ‘ inverse ’ indicators of the transaction service. the difference between m1 and divisia m1 is normally minimal, as the m1 sub - components ’ yields are relatively low and stable. conversely, there are more obvious differences between m3 and divisia m3, especially until 2015 when the yields on the longer - lasting monetary sub - components were significantly higher. in the most recent period and its instability over time. there is no correlation between divisia m3 growth and lagged inflation in the period 2001 - 12, while the correlation is significant in the subsequent period and peaks at one year approximately. 32 when reading these data, we cannot disregard the concrete conditions under which inflation picked up, especially the post - pandemic bottlenecks and above all the violent shock of the war and the soaring energy prices. these data are therefore not to be taken as evidence of causal relationships. movements in variables, especially in the most recent period, have been unusually sudden and affected by exceptional factors. the lags hypothesised by monetary policy are, as we know, long and variable, and there are countless omitted variables. of this evidence, we can only say with certainty that, rightly or wrongly, it has been used very little in more recent times. i am