provide sustainable growth and to increase employment throughout the country. the role of monetary policies has been misunderstood for a long time. this wrong assumption is that the increase in inflation and growth are parallel to each other and growth rates can be accelerated by loosening the monetary policy. frankly speaking, in the framework of early economics literature, this assumption can only be verified in the short term, in countries where inflation rates are low and there is no credibility gap in monetary policies. however, the models developed and long - term analysis made after 1980s revealed that the loose monetary policy under high inflation conditions could only end up raising the inflation rate and growth would slow down due to uncertainties arising from inflation. we very well know from our own high inflation experiences in the past three decades and other countries ’ experiences that average growth slows down when inflation climbs and average growth accelerates when inflation falls. the high growth rates we achieved in the past three years, which were marked by the stability program, is a good evidence of this generalization. attaining price stability is a prerequisite for achieving sustainable growth. for this very reason, today, the primary objective of the central bank is to achieve and maintain price stability, which makes the biggest contribution to sustainable growth and increase in employment. distinguished participants, in this part of my speech, i would like to dwell on the three pillars of the change observed in inflation dynamics under falling inflation process. the first significant change observed in economies under falling inflation conditions is the decline in interest rates. if enough credibility has been established in the falling inflation process, significant decline is observed both in nominal and real interest rates and this process does not only lead to rise in expenditures but also in investments. within this framework, a more detailed examination of the struggle against inflation process in turkey reveals that decline in inflation also helped mitigate the fluctuations in inflation and this means less uncertainty and less volatility in economy. while decreased uncertainty brings along decline first in risk premium and then in nominal as well as real interest rates, it decreases borrowing costs from the consumers ’ point of view, and opportunity cost of investments from the producers ’ view point. at this point, i would like to draw your attention to a risk factor in which the decline in borrowing costs has a significant role. under chronic inflation conditions, consumers tend to renew durable goods such as automobiles, white goods and alike less frequently. however, when a certain point is attained in the process of reducing inflation, the consumers start purchasing their postponed needs. demand for

caleb m fundanga : the new k10, 000 banknote in zambia opening remarks by dr caleb m fundanga, governor of the bank of zambia, at the official launch of the new k10, 000 banknote, bank of zambia, lusaka, 16 june 2008. * * * • members of the press • official from commercial banks present • ladies and gentlemen i wish to welcome you all to the bank of zambia. the objective of this press briefing is to announce the introduction of the new k10, 000 banknote in our economy. the new k10, 000 banknote will be put into circulation as early as this week. by showing you the new k10, 000 banknote first, we expect that you will, in turn, help us to inform the public about this new banknote. in order for us to help you understand the new k10, 000 banknote, we have produced posters and will make a short power point presentation. the posters are showing the main public recognition and security features of the new k10, 000 banknote. let me from the outset inform you that although we are calling it a new k10, 000 banknote, most of the features on the banknote are still the same as those on the current k10, 000 banknotes. the differences can best be detected by comparing this new k10, 000 banknote with the current k10, 000 banknotes in circulation. ladies and gentlemen the new features on the k10, 000 banknote are as follows : on the front of the banknote – there is a new bright silver demetallised holographic lead representing a fish eagle. this has replaced the old hologram of the head of a fish eagle. on the back of the banknote – the area around the value numeral, k10, 000 in the right top corner, is printed with a special ink which shifts colour from copper to green when angle of view is changed. these are the two changes that have been made to the k10, 000 banknote. all other features are basically the same. the reason for the introduction of these two features is mainly to enhance the security of the banknote. the bank of zambia would further like to inform the public that the new k10, 000 banknote and the current circulating k10, 000 banknotes shall circulate side by side. the new and current banknotes will therefore all be legal tender. the current k10, 000 banknotes will