few “ market - makers ” do so. third, therefore, the rules and infrastructure supporting the financial system need to help it withstand stress. accounting and valuation policies is one such area, now being debated. another is the trading and clearing platforms themselves. the authorities must do what they can to encourage the industry to focus on whether more wholesale market activity could and should be conducted across central trading and clearing platforms rather than otc. in the past, intermediaries have tended to be doubtful about this. but it is plausible that the system would have been somewhat more resilient if “ vanilla ” products had been subjected to the minimum standards, greater pre and post - trade transparency, and centrally set margin requirements that accompany transacting across central infrastructure. the underlying point here is that the bodies providing such central infrastructure have a clear interest in effective system - wide risk management and stability, and can be monitored by the authorities. for the authorities internationally, the moral of the story is that they must take an interest, from a systemic perspective, in the regimes which govern, and drive changes in, the structure and behaviour of the financial system. that means maintaining that interest during peacetime, not just a necessary rush of activity after crises occur. in setting the rules of the game, the authorities need to strike a trade off between risk and efficiency. we could reduce the risk in the system by stifling innovation. but in order to choose to tilt the balance towards innovation and efficiency, the authorities need to be confident that they have regimes that, amongst other things, ( i ) are effective in mopping up the mess, and ( ii ) do not create bad long - term incentives. orthodoxy is to cut off incipient systemic stress at the pass : intervene early, and decisively, but leaving losses with the private sector and afterwards rejigging the structure of the system to contain the implications for future behaviour. for that, tools are needed. in very broad terms, this is precisely what the special resolution regime for banks and improved deposit insurance proposed by the uk authorities are about. they are tools the authorities need to contain the disruption caused when bank failures occur and so to make such individual firm failures tolerable. but we also need policies for containing systemic stress more generally ; and, if possible, for heading off the risk of systemic problems in the first place. like others, in speeches i have identified three elements in that armoury : monetary policy ; central bank liquidity policy ; and policies

up of the bank of zambia, which is the central bank, and 13 commercial banks, with a branch network of 159 as at end - december 2005 compared to 123 in 1990. • commercial banks have improved the range of products offered to customers, in line with global innovations. these include automated teller machines ( atms ), foreign exchange accounts, visa, mortgages, and leasing services. in 2005, 4 commercial banks launched the e - switch facility to allow their customers to share their atms and other payment delivery channels, like point of sale terminals. these services were unheard of before the reforms and were supported by the international community. • commercial banks have also embarked on other initiatives including expansion programmes based on the community banking concept. this is consistent with the rural banking concept and is intended to provide financial services to those sectors of the community that are not currently serviced by the banking sector. your excellency, to meet the challenges which come with an expanded banking sector and in our desire to continue modernising the overall financial sector, it has been imperative to strengthen the prudential and supervisory mandate of the bank of zambia. in this regard, the key initiatives that have been endorsed, with an ultimate goal of promoting safe, sound and efficient operations have included : • the enactment and amendment of the banking and financial services acts in 1994 and 2000, respectively. • the implementation of the banking supervision application project, aimed at supporting banking supervision and providing a framework for supervision with the view of having a safer financial sector distinguished ladies and gentlemen, in order to promote greater access by the population to banking and financial services, the following have been implemented : • establishment of an automated electronic clearing house in 1999, ( to speed up processing cheques from 4 - 10 days for local and country checks, to 2 - 5 days, respectively ), enhancing the security of cheques and introducing machine - readable cheques. • establishment of a direct debt and credit clearing system ( ddacc ) and a realtime gross settlement system ( rtgs ) called zambian interbank payment and settlement system ( zipss ) in october 2001and june 2004. the ddacc system has facilitated the transfer of money by electronic means for payment of bills and salaries while rtgs allows a speedy, safer and large value clearing facility. commercial banks have also set up a foreign currency cheque clearing system. • the adoption of the financial sector development plan ( fsdp ). this is a framework which aims to promote the development