In effect, the single currency has removed the exchange risk between the countries of the euro area and is facilitating the standardisation of debt instruments and their management on a much larger scale. This integrating effect of the euro has been most evident in the money market, by virtue of, in particular, the establishment of the large-value payment system TARGET, made available to the banks by the European System of Central Banks. This integration has shown itself in, for example, the rapid adoption by the market of reference rates for the euro area, such as the EONIA overnight rate or the EURIBOR rate for maturities of less than one year. Above all, we have seen a total convergence in short-term interest rates within the euro area. In the bond markets, the integration of the markets remains incomplete, owing to: national differences relating to property rights over securities; taxation, accounting and supervisory regulations; and payment systems (which are also hindering the integration of the short-term securities markets and repo markets). The integration of the bond markets is nonetheless progressing. First, we have seen European bond indexes become standardised. Second, the differences in rates between sovereign issues within the euro area fell substantially in 1998. Furthermore, 1999 was characterised by a spectacular growth in euro bonds issued by private non-financial firms (a threefold increase, over the first ten months, compared with the same period in 1998), and an increasing share of bonds being issued by small and low-rated companies.

Further, our financial sector had no exposure to toxic assets, which led to the credit crunch in most developed  BIS Review 86/2009  1  markets. However, the current global financial crisis, with the subsequent global economic recession, has adversely affected Zambia, like most global economies, mainly through: reduced revenue earnings from mineral resources; job losses, particularly in the extractive industry; lower foreign capital inflow (both foreign portfolio investment (FPI) and foreign direct investment (FDI)); rising domestic inflation driven by pass-through effects of the depreciation in the exchange rate of the Kwacha against major currencies; and declining number of foreign tourists. Revenue earnings from mineral resources As you may know, Your Excellencies, Zambia, like many African countries, relies heavily on commodity exports. This has made the country more vulnerable to the global downturn. The global financial crisis and the plummeting commodity prices on the international market have negatively affected Government revenue. The global economic recession has resulted in a reduction in world demand for copper, which in turn, has led to the precipitous fall in copper prices. Copper prices at the London Metal Exchange (LME) fell from highs of $ per tonne in July 2008 to as low as US $ per tonne in December, 2008. The dramatic decline in the price of copper has entailed reduced earnings from copper exports by mining companies and subsequently reduced earnings for the Government from mineral royalties and corporate taxes from this source as well as falling income taxes from employees in the mining and related sectors.