booms. over the last decade new entry and regional economic integration have combined to spur competition in the financial services industry in uganda. furthermore, banks are embracing information technology to offer innovative financial products, such as mobile money, as well as improve the efficiency of their operations. several new banking products are on the market. innovation and growth in the banking market are essential for meeting the needs of consumers and businesses for financial services, but they also generate new sources of risks. bis central bankers ’ speeches traditionally credit risk was the major type of risk facing banks in uganda. the adoption of it increases the importance of operational risk, while the increasing integration of the uganda financial sector into global financial markets, through cross border banking and capital flows, also creates new sources of risk. the evolution of technology has made possible the issuance and innovation of many varied banking products including the visa, mastercard, online banking, mobile money and e - commerce. all these facilitate modern banking. it is a key driver of new banking products like mobile money transfers. today, it innovations have influenced our ways of living in many fields including banking industry and we all benefit from the new technologies. however, the growth of it investments and sophisticated products as well as advanced services in the banking industry comes with a concern on “ security ” and new risks which is the challenging key to propel the sustainability of such growth. what is the role of the central bank in the financial sector? the primary responsibility of the bou is to regulate the financial sector. regulation has two objectives. the first is to protect the interests of depositors. we do this by imposing prudential requirements on banks, under the framework of the financial institutions act ( fia ), 2004 such as minimum capital requirements and liquidity requirements and restrictions on risk taking such as limits on large loan and foreign exchange exposures. we also intervene in distressed banks, again under the framework of the fia, to ensure that banks do not collapse with insufficient funds to repay their deposits. the second objective of regulation is to preserve financial stability ; to prevent financial crises. this also involves ensuring that banks comply with the prudential regulations in the fia. but we are also intending to introduce additional regulatory measures, which are informed by the macroprudential approach that i mentioned earlier, which are aimed specifically at mitigating systemic risks. lessons learnt from the past crises have taught and reminded us not to ignore what adverse effects may come afterwards. admittedly, bou is just catching up with

. financial stability involves different tools. as far as we are concerned, it ’ s a question of bank regulation and “ macroprudential ” tools. there is one effect you didn ’ t mention : this policy cuts governments ’ interest rate costs and potentially gives them room for fiscal manoeuvre again. that is not our objective. monetary policy serves to guarantee price stability and support the productive economy. where countries have room for fiscal manoeuvre, lowering rates increases the scope that can be used to support growth, particularly by increasing investment. where countries do not have this room for manoeuvre, such as france, my advice would be to use the lower rates to lend credibility to debt reduction, rather than to bis central bankers ’ speeches increase spending or cut taxes. however, that ’ s not a matter for the ecb to decide. it ’ s the european commission that is the guardian of the fiscal policy framework in the euro area. is sustainability of public debt one of the objectives of qe? no, it is not! first, it would be wrong to judge the sustainability of government debt, which is a long - term concept, using current yields and growth rates. the only way to make public debt sustainable is to cut deficits in a sustainable way and improve the productivity of the economy. also, this is clearly not the philosophy enshrined in the treaties ; these actually contain a whole series of provisions aimed at protecting the ecb from fiscal dominance, or in other words ensuring that monetary policy is not subject to the objectives of fiscal policy. omts and qe are monetary policy tools and have a number of safeguards to stop them from becoming fiscal policy instruments. with qe, for example, the ecb cannot buy more than one third of a country ’ s debt. this cap is intended to preserve market mechanisms and market discipline, and also to ensure that the ecb does not become the states ’ lender of choice. monetary policy always has a distributive impact on all economic agents, whatever the tool used. but every decision about qe, whether it be starting it or increasing or decreasing its scale, or its duration, will only be taken in line with the objectives of monetary policy, primarily the medium - term inflation outlook. if countries are counting on qe to gain some time, they are making a mistake. they need to make use of it to push through essential reforms so growth is sustainably higher. the ec