In the euro area, inflation has proven more persistent and more broad-based than expected, labour market slack is being reabsorbed at a faster pace than anticipated and pipeline pressures continue to build up. At the same time, prospects are rising that the fast spread of the Omicron variant may herald a turning point in the coronavirus (COVID-19) pandemic.
In addition, given that the banks which failed collectively comprised less than 5 percent of the banking system’s deposits, Uganda has not come close to suffering a systemic banking crisis. Hence the second strategic objective of the BOU’s bank regulation, that of preventing a systemic financial crisis, has also been achieved. Let me now turn to the potential costs of bank regulation.