The average capital adequacy ratio of Ugandan banks has remained well above the prudential minimum of 12 per cent for the past three years and the banks’ overall liquidity remained good. However caution should be exercised to ensure that, in the medium to long term, banks remain solvent, profitable and liquid while allowing for increased intermediation to finance economic activity.
In addition, it is important that financial innovation and outreach continue to take place to meet customer needs. In this regard, the Bank of Uganda, in 2009 set up the Financial Stability Department which was charged with the mission of identifying and assessing potential systemic risks to the structure and functioning of the financial system and to develop measures to reduce those risks.