An example of a recent early prudential action occurred in June 2007, well before the recent financial turmoil aggravated: the Central Bank established a foreign exposure capital requirement for cross-border positions within international banking groups. In a nutshell, the Brazilian approach insulated its financial institutions from the sort of problems that is affecting counterparties abroad. In fact, it is no coincidence that our financial system has shown resilience and has been largely unaffected during the current financial turmoil. BIS Review 44/2009  1  The overall assessment on the Brazilian regulation framework, which was sometimes criticized on the grounds of excessive carefulness, is currently praised in international forums. For instance, the fact that Brazilian regulators have access to information from the clearing systems of all operations in the financial market is a factor of admiration and reference worldwide. Before closing, let me mention that I strongly welcome the recent enlargement towards emerging economies – including of course Brazil – of the Financial Stability Forum (FSF) and of the Basel Committee on Banking Supervision (BCBS). Emerging economies rapidly increasing weight in the global economy and global finances makes them an integral part of any viable solution to the current problems, as we are witnessing today in regard to their role in the G-20. The enlargement of forums in the area of regulation and financial sector supervision give more legitimacy to the discussion being held, with a view to design a new and more robust regulatory framework.

People in the informal sector and SMEs who hitherto were unable to open savings accounts with banks due to high minimum deposits and service charges should find the “Tusunge” Savings Product attractive. Ladies and Gentlemen, in the face of an ever growing fear of donor fatigue, public deposits and private capital are likely to be the main source of funding for the microfinance industry to achieve the growth required for it to have significant impact on financial inclusion and poverty reduction across the region. Notwithstanding this, allow me now to reflect on some of the key challenges in the financial sector that all of us must strive to address: (i)  Increasing access to financial services by the SME’s who form the backbone of the economy. This sector provides employment for many people who cannot be absorbed into formal employment. However, increased access to financial services remains a key challenge to this segment. (ii)  Although the Bank of Zambia has licensed 25 Microfinance Institutions, most of them operate along the line of rail providing mainly salary-backed loans. There is need for microfinance institutions to support production by providing finance to agriculture and manufacturing instead of merely providing consumption related salary backed loans. (iii)  There is need for all microfinance institutions to utilise the credit reference bureau at all times. A robust credit reporting apparatus will enable the financial sector to share critical customer information that will lead to lowering the credit risk and ultimately lending rates in the financial sector.