that we have been vigilant from the very first day. when the problems started to appear in the financial markets, on 9 august 2007, we were the first central bank to react, taking action very quickly. bis central bankers ’ speeches in parallel, dysfunctioning financial markets have threatened to compromise our ability to guide the outlook for price stability by using our conventional instrument – interest rates. faced with this situation, over the years that followed, we have implemented a number of unconventional measures to ensure that our decisions on interest rates are transmitted to the whole economy, despite the problems observed in the financial sector and capital markets. in particular, it was to allow banks – regardless of the level of the key interest rate – to continue to lend to households and businesses. from the outset of the crisis we have established the principle of strict separation between our unconventional and our conventional measures, that is to say, our policy rate of interest. our interest rates are fixed so that we can ensure price stability over the medium term. the implementation of unconventional measures depends on the functioning of the monetary policy transmission mechanism and must respond to the degree of dysfunctioning or disruption of monetary and financial markets and market segments. as the crisis called for rapid and unprecedented action, we never lost sight of our main objective, namely to maintain price stability over the medium term for the benefit of the 331 million citizens of the euro area. all – i stress that word – all monetary policy decisions we have taken over the last 12½ years were aimed at complying with this commitment. let me elaborate on this point. as you know, in normal times, central banks mainly influence the economy and inflation by using the instrument for setting short - term interest rates. in practice, the identification, at an early stage, of the risks to price stability is a delicate task. to see it through, the ecb bases itself on a monetary policy strategy supported by several sources of information. the economic analysis we undertake enables us to synthesise information on short - term inflationary pressures from a large number of economic indicators. thanks to the monetary analysis that we also carry out, we can cross - check this information with that concerning medium - term inflationary pressures drawn from the monetary and financial indicators. these are the two “ pillars ” of our monetary policy which indicate to us the necessary steps in respect of the interest rate to ensure price stability over the medium term. the decisions we have taken in response to political pressures have demonstrated our independence. we refused to lower interest rates

bank introduced the policy rate which is aimed at fostering transparency in the determination of lending rates. under the new framework, all financial institutions are now required to realign the pricing of loans with reference to the policy rate. furthermore, in january 2012, the bank of zambia introduced the new minimum capital requirements for commercial banks. the minimum primary capital was raised from k12 billion to k104 billion and k520 billion for locally and foreign owned banks, respectively. this measure is intended to make commercial banks more resilient to financial instability and provide banks with strong balance sheets that would meaningfully support economic activities in the country. i am pleased to note that stanbic bank zambia limited was one of the first banks to reduce their lending rates in line with the objective of the bank of zambia policy rate. i am also pleased that stanbic fulfilled the new capital requirements well ahead of the time set for the exercise. before the end of may 2012 stanbic had fully met the capital increase requirement well ahead of the deadline of 31st december 2012. we are confident that the measures taken collectively by the bank of zambia and commercial banks will provide enhanced scope for more financing at lower cost thereby facilitating further growth of the economy and the sme sector in particular. ladies and gentlemen, let me take this opportunity to appeal to all smes and individuals that obtain financing from financial institutions to be responsible borrowers by ensuring that these loans are paid back as the failure to settle obligations destabilises the banking sector and leads to increased cost of borrowing. as you all are aware, banks play a crucial role in financial intermediation and this is enhanced by branch network expansion programs. thus, there is need for all financial sector players including msmes to play their role in augmenting savings mobilization which will in - turn provide the necessary financing to the productive sectors in the economy. in concluding, i would like to encourage banks to seek various ways of supporting the smes not only in soweto market but in other underserved places throughout the country. for instance buseko market in lusaka and chisokone market in kitwe would offer huge opportunities for banks and other financial players. let me also congratulate stanbic bank for introducing the sme tamanga account and for streamlining processes such as customer bis central bankers ’ speeches evaluation and account opening procedures to cater for the special circumstances of this very important part of our economic sector. it is now my honour and privilege to declare the sowe