Another risk, spotted by Raguram Rajan 11 , is that low interest rates lead banks into a “search for yield” strategy, in order to maintain a desired – or even institutionally mandated – rate of return. A time-honored principle of finance is that, ceteris paribus, the only way to increase the expected rate of return is to take more risk, and the result of such search for yield is therefore that banks will increase their risk exposure. An alternative channel through which excessively low rates may have contributed to the building up of financial imbalances during the period leading up to the crisis originates from central banks’ ultimate focus on goods’, rather than asset prices’ inflation. During a period characterized by large, benign supply shocks originating from the integration of large developing countries into the global economy, the resulting disinflationary pressures induced central banks to keep interest rates at comparatively low levels – in particular, levels which, with the benefit of hindsight, may have contributed to excessive credit growth, with the resulting creation of asset prices’ bubbles. Some commentators have henceforth suggested including asset prices into the index targeted by the central bank. I see this as a distinctly sub-optimal solution, as it would essentially amount, in practice, to moving to a situation with one instrument, monetary policy, aiming at a combination of two objectives, price and financial stability. Economic theory dictates that, in the presence of multiple objectives, policymakers ought to rely on a number of instruments at least equal to the number of objectives.

Caleb M Fundanga: Equal rights, equal opportunities – progress for all Opening remarks by Dr Caleb M Fundanga, Governor of the Bank of Zambia, at the Official Launch of the Financial Institutions’ Exhibition and Workshop in commemoration of International Women’s Day 2010, Lusaka, 5 March 2010. *  *  *  The Deputy Permanent Secretary, Gender and Women in Development, Ms Christine Kalamwina; The International Labour Organisation Country Director, Mr Gerry Finnegan; The Deputy Governor – Administration, Bank of Zambia, Dr Tukiya Kankasa-Mabula; Chief Executives and Representatives of Exhibiting Institutions; Heads of Non Governmental Organisations; Distinguished Invited Guests; Members of the Press; Ladies and Gentlemen It is my honour and privilege to participate in the launch of this important exhibition by financial institutions in commemoration of the International Women’s Day for 2010 under the global theme “Equal Rights, Equal Opportunities: Progress for All.” Ladies and Gentlemen, as you may be aware, the International Year for Women was declared by the United Nations in 1975. Since then many countries world over celebrate International Women’s Day to recognise the achievements of women without regard to national, ethnic, cultural, economic or political divisions. International Women’s Day is an occasion to look back on past struggles and accomplishments but even more importantly a time to look ahead to untapped potential and opportunities that await future generations of women. Each year on this special day, hundreds of International Women’s Day events occur all around the world.