All other creditors typically travel with the “bad bank” and become claimants in the insolvency. We can be confident that this will help to buttress stability. Encouragement from the EU to all members states to establish such regimes would be really useful. But we also know that, of itself, this is insufficient. It cannot cope with distressed LCFIs (“large and complex financial institutions”) without injections of public money. In the first place, every country having its own Special Resolution Regime does not solve the problem of resolving cross-border banking groups. Second, such regimes cannot cope with investment banking, whether national or global, if a buyer cannot be found. Even for a (hypothetical) LCFI operating entirely within a single jurisdiction, with all of its counterparties, customers and contracts domiciled there, a standard resolution regime could not effect an orderly run down of, for example, a massive, complex derivatives portfolio. Putting over-the-counter derivatives though central counterparties would help. But it would not securely solve the problem. Today I want to surface those big issues, and to encourage the EU and the international community more generally to explore possible solutions. In doing so, I take our objectives to be twofold: (i)  First, to avoid a disorderly disruption to the provision of financial services to the economy in the event of firm distress;  (ii)  And second, to put market discipline back into the system, by having losses fall to uninsured creditors as well as to equity holders, and without public sector solvency support.

The Government of the Republic of Zambia (GRZ) recognizes that the limited access to financial services and low number of products available to the different sectors of the economy has hindered the development potential of Zambia’s economy. There is need therefore, to revitalize the financial sector so that it meets the challenges of accelerated and sustained investments in key sectors of the economy. Recent developments in the financial sector world-wide offer some encouragement that working together could extend the range and reach of financial services that are available to our people. Still a lot remains to be done to extend financial services to the majority of our people and foster ongoing sustainability of our financial institutions. It is against this  BIS Review 131/2008  1  background that Bank of Zambia found it necessary to hold this Conference to deliberate on the topical concept of Islamic Banking under the theme “Building Partnerships for Development”. The main objectives of this conference are to get a general understanding of the operations of Islamic Banking and to share views on promoting partnership for development through Islamic Banking, draw lessons, and recommend strategies for implementing Islamic Banking in Zambia in order to improve access to financial services. The rapid growth of Islamic Banking raises a series of important questions, such as whether Islamic Banking should be regulated differently from conventional banking. Because modern Islamic Banking is relatively new to most countries rules for financial accounting, bank governance, and lending standards are continually evolving as business practices are refined.