need for provision of affordable banking services to the majority of our people can not be ever emphasised. such services will greatly benefit our people and contribute positively to poverty reduction in the country. as access bank ventures into full fledged business, i urge the bank ’ s management to devise strategies that will contribute to government ’ s efforts of reducing the cost of borrowing and increasing the level of inclusiveness in the country. i also implore management to provide support to various sectors of the economy, especially the priority sectors of agriculture, tourism, manufacturing and small - scale mining to effectively contribute to the development of the country. ladies and gentlemen, the introduction of the fourteenth bank in the banking sector will obviously come with its own challenges. for us at bank of zambia, this entails further strengthening of our supervisory capacity. we welcome this challenge and hope to rise to the occasion by providing adequate supervisory infrastructure and an environment conducive to conducting good business. in the past few years, the bank has embarked on a process of strengthening its supervisory framework through various initiatives. one such initiative is the adoption of an enhanced riskbased approach to supervision ( rbs ). the enhanced rbs approach will entail more regular interaction with the banks than previously in order to understand and monitor activities and risks on a continuous basis. as part of the adoption of the enhanced rbs, the boz has formulated risk management guidelines to banks which will serve as a minimum standard in their design and implementation of risk management frameworks, relative to their size and complexity. further, in 2006, the bank issued corporate governance guidelines to all financial service providers. the guidelines set forth a broad framework of fundamental governance principles to guide the actions of directors and managers. this will strengthen governance in institutions and minimize the risk of bank failures as a result of bad governance. your excellency, honourable ministers in order to insulate the financial system from external influences like the financial turmoil currently being experienced in some western countries, the bank has been working on a macro prudential approach to supervision of the financial system. macro prudential analysis looks at the health of the underlying financial institutions in the system and performs stress tests and scenario analysis to help determine the system's sensitivity to economic shocks. this analysis also looks at macroeconomic data including gdp growth rates, inflation, interest rates, balance of payments, exchange rates, asset prices and the correlation of markets within the system. distinguished guests, i am advised that access bank comes with a bouquet of banking

liquidity and high volatility. in this context, investors ’ worries regarding a loss of market access for some member states may have become entrenched, and their expectations self - fulfilling. moreover, for some countries, government debt market liquidity has been threatened to completely dry up in some periods. overall, there has been a combination of fundamental causes and market distortions. it soon became clear that the dramatic movements in government bond yields were not merely a barometer of investors ’ valuation of liquidity and credit risk. rather, the extreme levels of bond yields themselves were exerting an adverse influence on other financial market segments, the banking sector and also the effectiveness of monetary policy. what is the relevance of sovereign debt market tensions for monetary policy? there is a strong link between the stability of sovereign debt markets and the smooth functioning of monetary policy. this becomes very clear once we consider the prominent role of government bonds in the monetary policy transmission mechanism. i would like to identify four channels through which the functioning of government bond markets can interfere with the transmission of monetary policy. let me call them the interest rate channel, the wealth channel, the collateral channel, and the bank balance sheet channel. first, government bonds play a key role in transmitting the monetary policy stance to the real economy via the so - called interest rate channel. in times when government bonds are considered as essentially risk - free and liquid instruments, a change in current and expected policy rates is a central factor in shifting the government bond yield curve. changes in longterm bond yields, in turn, translate to some extent into movements in corporate bond yields and bank lending rates – either via arbitrage relations or via pricing heuristics based on government bonds –, thus ensuring a smooth transmission of monetary policy throughout financial markets. however, since end - 2008 bond yield changes of several sovereign issuers in the euro area have become heavily dominated by high and volatile premiums, often driven by contagion and market overreaction. such effects have come to override changes in the monetary policy stance, blurring the transmission of monetary policy signals to the real economy. second, faced with threatening direct and indirect losses from strong price declines of sovereign bonds, consumers may opt for precautionary savings, which would counteract a desired stimulus to consumption from monetary policy easing. bis central bankers ’ speeches third, government debt securities have been a key source of collateral for banks to use in secured lending with other banks and the ecb.