Distinguished clients and invited guests Private investment is a critical source of long-term capital for spurring sustained economic growth and diversification while promoting innovation by supporting the micro, small and medium sized enterprises (MSMEs). Chairperson In order for the financial sector to fully satisfy the credit demands of the productive sector in Zambia, commercial banks must not be overly conservative in terms of their risk appetite for 2  BIS central bankers’ speeches  MSMEs. Rather, Banks should seek to better understand the risks associated with lending to these enterprises. Further, it is important that banks better understand the risk associated with lending to specialized and growth sectors such as agriculture, tourism, manufacturing and mining by deliberately developing relevant human resource skills in these sectors. Ladies and gentlemen In its quest to see the financial sector take up an active role in financing the productive sector and facilitating the flow of investment into the economy, the Bank of Zambia continues to undertake a number of policy and structural reforms. Among these reforms is the new increase in the minimum capital requirement for banks to K520 million and K104 million for foreign and local banks respectively. These capital levels are expected among other things to: i. Make the banking system strong enough to withstand shocks and instability in the economy should they occur;  ii. Enable banks to underwrite big ticket transactions;  iii. Make banks contribute more to the growth of the economy; and  iv.

Corporates in Asia rely more on bank loans compared to bonds. MAS will therefore introduce a grant to fund the costs of conducting external reviews and ratings, for green and sustainability-linked loans. The grant will also promote the development of sustainable lending frameworks that provide simplified processes and standardised criteria for borrowers. This will reduce the cost of green borrowing and encourage more small and medium enterprises to tap on such loans. Progress on the green bond and green loan fronts has been good. Singapore is now ASEAN’s largest green finance market, accounting for close to 50% of cumulative ASEAN green bond and loan issuances. [6] Notably, sustainable financing and investment flows have held up well through the first half of this year, despite the pandemic and broad-based economic weakness. Singapore is also steadily developing solutions such as Insurance Linked Securities to address climate risks. MAS’ Insurance Linked Securities Grant Scheme has seen strong take-up since its launch in 2018. Within two years, we have seen nine catastrophe bond issuances in Singapore. This includes the first Asian sovereign and catastrophe bond covering earthquake and typhoon risks in the Philippines. The strong expansion of wealth in Asia will provide a boost to sustainable investments. Personal wealth in Asia excluding Japan has seen an eight-fold increase over the past two decades. [7] Despite the economic disruption due to COVID-19, Asia is projected to have the strongest wealth growth in the world over the next 5 years. This wealth is increasingly being allocated to ESG causes and investments.