samchain/econo-pairs-v1 huggingface dataset:
Denny H Kalyalya: Broadening financial services provision Opening remarks by Dr Denny H Kalyalya, Deputy Governor-Operations of the Bank of Zambia; at the opening of the Pilot Financial Inclusion Advisors (FIA) Programme, Lusaka, 6 April 2009. *  *  *  Chairperson The Deputy Minister of Finance and National Planning, Ms Chileshe Kapwepwe, MP Dr Mahaela Smith, Co-Founder and CEO, the Commonwealth Partnership for Technology Management (CPTM) Deputy Governor – Central Bank of Swaziland Distinguished Resource persons and representatives from Bank Negara Malaysia Regional Central Bank representatives Distinguished Participants Ladies and Gentlemen On behalf of the Bank of Zambia and indeed on my own behalf, it gives me great pleasure to welcome you all to this pilot Financial Inclusion Advisers programme and to Zambia for our colleagues from other countries. Before going any further, please allow me to convey the Governor’s regret for not being able to be with us. He is attending to another important assignment, the AERC Senior Policy Seminar on the Global Financial Crisis and its implications for African Economies, also here in Lusaka. Nonetheless, he extends his welcome and good wishes for a successful programme. This important conference has brought together practitioners and regulators of microfinance institutions from different countries to share experiences. I also note that participants have been drawn from Central Banks in the region, the public sector, commercial banks, microfinance institution and other non-bank financial institutions.

BIS Review 46/2009  1  This Conference is therefore, aimed at enhancing financial inclusion by equipping practitioners and regulators with tools to promote financial literacy and to expand the provision of financial services. Chairperson: Allow me to give some highlights of the status of financial inclusion in Zambia. Like in many other developing countries, the financial sector in Zambia still faces a number of challenges. The joint IMF/World Bank, Financial Sector Assessment Programme (FSAP) Report of 2002, highlighted a number of these, including limited access to financial services by the rural and peri-urban population and doubtful sustainability of financial services in Zambia. In light of these findings, and in recognition of the strategic importance of the development of the financial sector in contributing to sustainable economic growth and poverty reduction, the Government of the Republic of Zambia developed and launched the Financial Sector Development Plan (FSDP) in 2004. The FSDP is a comprehensive five year strategy to build and strengthen the financial sector infrastructure to enable it to support economic diversification and sustainable growth. Under the FSDP, two important studies, namely, the FinScope™ Surveys of 2005 and 2007, on the demand for and supply of financial services in Zambia have been undertaken. These studies have augmented the earlier findings of the FSAP with respect to the key developmental challenges for the financial sector in Zambia.
But there is a limit, largely determined by market forces, on how much debt an individual or a firm can incur. Lenders, whether banks, finance companies or bond investors, would look at the creditworthiness of the borrowers and demand high interest rates to cover the credit risks or simply refuse to lend any more if the repayment ability of the borrower is in doubt. Moreover, a person with a reasonable mind would need to consider the risk of facing the unpleasant consequence of bankruptcy if he fails to repay his debts on time. The same applies to the owners or managers of companies. However, it is quite different when it comes to government debts. 13. In times of war, the government has no choice but to borrow from every possible source to finance the warfare as it is a question of survival of the nation. We all understand this and BIS central bankers’ speeches  3  so did the peoples of the countries at war. However, the developed countries have not been at war with each other for a long time since 1945 and why did their governments keep on piling up public debts to unsustainable levels? There are many complicated reasons as well some rather simple reasons. Let me go straight to the simple reasons today.

The ability of our economies to absorb these shocks was however different. The natural instinct of macroeconomic policies facing such a contraction scenario is to engage in countercyclical measures in the form of expansionary monetary and fiscal policies. However, the very presence of financial stability concerns in the equation significantly changed the equation. We can safely argue that countries which experienced the least macroeconomic and financial imbalances were the ones better placed to pursue countercyclical policies and in fact the ones which emerged the fastest from the effects of the crisis. I believe Albania is such a country:   We had no bank failures or public injections of capital;    We did contain and reverse the confidence crisis in the financial system and its adverse effects. In fact, we did not experience financial disintermediation;    We did continue to grow, albeit at a slower pace;    We did manage to keep inflation expectations anchored. Therefore, I will share with you our thoughts and measures throughout this period. To conclude this topic I will briefly summarize my personal lessons from this crisis. Before the crisis, Bank of Albania was concerned for the possible financial threats that were being accumulated during the years of fast financial intermediation. To illustrate the point: most of the credit growth went in the non-tradable sector, with services and construction accounting for most of the expansion.
The UK economy has also been facing high and rising degrees of uncertainty about future trade, though the source has been different – Brexit. According to our Decision Maker Panel, the number of companies reporting Brexit as among their top three risks have risen from one-third in April 2018 to around 50% now. Most recently, the perceived risk of a “no deal” Brexit has risen, with betting odds placing a roughly 30% probability on that event, double the probability earlier this year. With no precedent, it is very difficult to gauge the economic impact of a “no-deal” Brexit. One simple way of doing so is simply to ask companies how they think it would affect them. This is something the Bank’s regional Agents have been doing since late-2018. Chart 30 shows companies’ expected responses for output, employment, investment and exports under “no deal/no transition” and “deal with transition” scenarios using the combined results of four surveys from December 2018 to April 2019.28 The expected responses to a “no deal” are negative, significantly so. Output is expected on average to fall by 3 ½%, employment by 3% and investment by 1 ¼%. By contrast, expected responses to a deal scenario are all positive. Looking at the different waves of the survey, the good news is the expected negative effects of “no deal” were somewhat smaller in the later waves compared to the first in December 2018. That likely reflects the significant increase in Brexit planning and preparation, by companies and the government, over that period.

With several factors both internal and external having materialized over the last several weeks, one can already see that 2014 will be yet another challenging year for the Thai economy. However, with cooperation from all sides, I hope we shall be able to weather the upcoming storms with a common vision and readiness, and that a clear blue sky is beckoning in the distance. Thank you. 2  BIS central bankers’ speeches
The most recent labour market statistics for the United States indicate a continued favourable development, although the monthly statistics for household consumption indicated some slackening of demand. The purchasing managers index for the manufacturing industry in March indicated a small decline for the United States, while the index continued to improve for the euro area. Other indicators for the euro area such as the European Commission’s surveys show a positive development recently. Growth in Asia has been stronger than we had assumed. All in all, my opinion is that international economic activity appears slightly stronger now than we assessed in the February Inflation Report. For Sweden, the assessment in the Inflation Report was that GDP growth would be relatively high in the coming years. Statistics Sweden has since then published national accounts for the fourth quarter  BIS Review 33/2006  5  of 2005. These figures show that GDP growth was somewhat lower than expected, although the outcome for earlier periods was revised at the same time in such a way that the growth for the whole year 2005 remainedl in line with the forecast. Recently, indicators have shown a relatively positive picture of the development of economic activity, for example, the business tendency survey, the retail trade index and statistics for foreign trade. The purchasing managers index for the manufacturing industry has, as has been the case in the euro area, indicated a clear improvement in industrial activity since the middle of last year and this development has also continued recently.

5  BIS Review 111/2000  First, the huge outstanding debt owed by the corporate sector must be resolved, as cleanly and expeditiously as possible. Governments need to step in to push the process through, and in extremis to take over insolvent firms and do the clean-up themselves. Clear and enforceable bankruptcy laws are needed to deter prolonged default by debtors, and give creditors incentives to settle. And for the future, there must be more transparency in terms of corporate governance and reporting. For example, Thailand passed new bankruptcy and foreclosure laws last year, and I understand has just passed a new Accounting Act. Among other things, the new laws will stipulate minimum qualifications for auditors, and ensure that directors take greater responsibility for the accuracy of financial statements. Investors and analysts will view these steps positively, especially if foreclosure cases brought under the new laws and now before the courts are fairly and speedily settled. Second, many private sector firms, particularly family-owned companies, need to upgrade and modernise their management. Family businesses and conglomerates are a feature of many Asian economies. These were built up through the business acumen and drive of their founders, and still account for a sizeable component of the economies. But the world has changed. Capability and competence are now at a premium, and relationships count for less. Family companies need to segregate clearly ownership rights and management functions, and bring in other significant shareholders and external capital.
2  BIS central bankers’ speeches  investors in critical nonbank markets, such as the Commercial Paper Funding Facility (CPFF) and the Term Asset-Backed Securities Loan Facility (TALF).3 Since the federal funds rate target reached its effective lower bound late in 2008, the FOMC has considered additional ways of providing further policy accommodation. At the direction of the FOMC, the Desk has designed and implemented asset purchase programs that have greatly expanded the balance sheet of the Federal Reserve and changed the composition of the types of assets it holds. Market monitoring and the knowledge of market functioning has been crucial for the effective translation of broad policy directives for these purchase programs into concrete operational plans. In the case of agency mortgage-backed securities (MBS) purchases, initially the Federal Reserve used external investment managers, acting at the direction of the Desk, as a means of implementing MBS purchases. This was necessary because the Desk had not transacted in MBS prior to the crisis and thus did not have either the systems or the market knowledge needed to execute purchases efficiently. As the Markets Group staff developed the operational capacity and analytical expertise, partly by working closely with the investment managers, it began to execute MBS purchases and assumed full trading responsibility in March 2010. Prior to assuming their trading role, staff gained an in-depth understanding of the fundamental aspects of the MBS market and technical trading conventions. This expertise allowed the staff to effectively synthesize numerous market indicators and apply them to its trading.

For economists who did not have the opportunity to observe the panic up close as I and most of my colleagues had, the developments in this four week period must have been bewildering given how widely events on the ground and theory diverged.15 At the time and at times since, some academic economists have questioned whether bank lending to nonfinancial corporations and individuals was really declining during this period in ways that posed a threat to the real economy. It is a fact that weekly measures of the stock of bank loans were increasing in this panic period. But for those following financial markets closely there was a keen awareness of the importance of securitization prior to 2007 and its collapse in 2008. More revealing than the stock of bank loans was the amount of loans being securitized, which with the exception of mortgages eligible for securitization by Fannie and Freddie fell effectively to zero. The TALF was designed to support the return of new securitization in certain markets.
The interconnectedness between these three laws recognizes the importance for central bank in optimizing the synergy in responsibilities for safeguarding concurrently monetary and financial stability. The new BOT Act empowers the central bank to ensure monetary and financial system stability and enhances its operational efficiency and effectiveness of monetary operations. This is achieved by strengthening the transparency and accountability of the BOT’s monetary policy process. Under the new Act, the Monetary Policy Committee will be charged with legal responsibility in the realm of both monetary policy target and exchange rate management policy. The Act will also increase the Bank’s operational independence by making it more difficult to dismiss the Bank’s governor, requiring a cabinet decision with a clear underlying reason. Meanwhile, the Financial Institutions Business Act (FIBA) governs the framework and conduct of financial institution supervision, designed to capture the international best practices of financial institution supervision according to Basel Core Principles (BCP). Specifically, this law allows the central bank to implement consolidated supervision of financial conglomerates, as their business models evolve, together with prompt corrective actions, macro-prudential measures, and measures to improve consumer protection from unfair practices by some financial institutions and non-banks. Finally, the Deposit Protection Agency Act will replace the current blanket deposit guarantee in place since 1997. The new system of limited-coverage deposit insurance will be phased in over four years to allow banks and depositors to adjust to the new framework.

One of the recommendations adopted was the need to modernise and harmonise financial sector legislation. This included the current Bank of Zambia Act. 2. Secondly under Southern African Development Community (SADC), the SADC Committee for Central Bank Governors (CCBG) was tasked to develop harmonised  BIS Review 128/2010  1  Encouraged by these two events, the Bank of Zambia embarked on a process of reforming and modernising its legislation. In doing so we relied heavily on the provisions of the Model Law but were mindful that these had to relate to our local circumstances. This exercise has resulted in a “home grown” draft Bank of Zambia Act which is the subject of this workshop. We are pleased to report that the draft has incorporated principles of international best practice.
Some central banks are presently undergoing the process of shaping and consolidating their  BIS central bankers’ speeches  5  governance, an endeavor intended to transform them into modern monetary authorities. And, believe me, I know from experience how complicated such a process can be! In the early nineties, when I took over as Governor of the National Bank of Romania, a tremendous effort was needed to put into practice the transition from a monobank-type system to a two-tier system. It was by no means a simple task to reform an institution that had operated in the context of centralised planning of the entire economic activity and to separate commercial banking operations from central bank operations, which remained the responsibility of the NBR. The new NBR only counted less than 5 percent of the former central bank employees, most of them in the cash management and accounting units! Therefore, we had to build from scratch several departments that are key to the functioning of a modern central bank, such as monetary policy, economic research, banking supervision and regulation... Fortunately, the NBR was given a helping hand in improving its governance structure when it needed it the most. Just to give two examples, banking supervision was set up at the NBR with the extremely useful support of De Nederlandsche Bank and the forex market was put in place with the assistance from the central bank of Belgium. We are extremely grateful to both institutions for their generous support.

I note from the very elaborate programme for this meeting that you will in the next three days cover a wide spectrum of issues some of which will focus on factors that constrain SMEs access to finance and some of which will focus on what needs to be done to change this situation. The meeting is, therefore, an opportunity for us to face a number of challenges that characterize this sector. These will include revisiting strategies and approaches to SME financing currently in use as much as it will require a review of current institutional arrangements through which finance is directly delivered to SMEs, on one hand, and those which indirectly obstruct or facilitate this flow of resources, on the other. However, I believe that probably the greatest challenge before this assembly is to attempt to narrow the gap between analysis of the problem and the implementation of measures and actions that work. Meetings, workshops, seminars, etc. on SME financing are plenty at national, regional and international levels. Some of you have had the opportunity to attend several of these meetings in the past. Indeed, some of you have become experts at talking about the subject. Barely two weeks ago, the Bank of Zambia held a financial sector forum here in Lusaka at which views of various stakeholders on what needs to be done to address binding constraints to the SME sector were considered. The fact that the discourse on SME financing continues underpins two significant positions.
If new mortgage rates rise by 3 percentage points, as market rates currently suggest, the ‘typical’ monthly interest payment will go up by just under £  Page 11  Bank of England outreach programmes Listening to people from all parts of the United Kingdom  It is no surprise that people who talk to us at our outreach events are worried about rising interest rates too. This is not just those on variable rates or those nearing the end of their fixed-term mortgage deals. Even if home ownership feels remote for many younger people, they worry that rents could rise as landlords look to pass through higher mortgage rates. Some older people have been able to save enough through the pandemic to pay off their mortgages early, but many struggle themselves or worry how younger people will cope. These concerns bring home that, by increasing Bank Rate by close to 4 percentage points, we have tightened monetary policy significantly. It is having an impact. Let me say two things about that. First, with the external shocks that have hit the economy, there is no easy way out. People on lower incomes are struggling to make ends meet. We must ensure that the situation does not get worse through homemade inflation taking hold. The UK labour market remains very tight. Since the start of the Covid pandemic, we have seen a large increase in the number of people who do not take part in the labour market in this country. The UK labour force has shrunk.

So, this must be good news – apart from the inconvenient questions one asks from time to time about “How long will it last?” or “Is it sustainable?” For Emerging Market Economies, we have all witnessed the inflow of capital at the initial stages of the QEs, which drove up asset prices and inflationary pressure. This is not surprising as investors have no choice but to take aggressive steps to search for yields globally. This results in a misallocation of resources, as the abnormally low interest rates distort investment decisions by allocating capital away from productive real investment into risky assets that yield higher returns. The lack of real investment in turn reduces medium-term potential growth. Indeed, business investment growth in the US has been lacklustre since the economy recovered from the global financial crisis. The misallocation of resources aside, the search for yield behaviour also leads to a mispricing of risks across a wide spectrum of asset classes. In the US, junk bond issuance has risen sharply in the past few years, accounting for about 24% of all bond issuances so far in 2013, while the average high-yield spread has fallen below 5%. While the buoyancy in the asset markets helps support the economy in the short term, imbalances could build up in the economy and the financial system that may pose a threat to systemic stability when the unconventional monetary policies begin to unwind. 13.