mr stals discusses regional trade and financial integration in the southern african development community address by the governor of the south african reserve bank, dr chris stals, at a meeting for business people arranged by the reserve bank of zimbabwe in harare, zimbabwe on18 june 1999. reasons why international financial cooperation is important there is a worldwide trend towards an integration of financial markets. this process of globalisation is no longer restricted to the industrial countries of the world, but emerging markets, countries in transformation and the developing countries of the world are all being drawn into this process. in many parts of the world, this process of globalisation goes through an intermediate phase, and that is one of regional economic cooperation or integration. the european union, which has been developing over the past thirty years, has now reached the advanced stage of almost full financial integration. there are many other examples, such as mercosur in south america, nafta in north america, and asean in east asia, where similar initiatives for economic integration are in progress. the smaller countries of the world can easily be marginalised in this process of global financial integration, unless they form part of some regional cooperation arrangement to guide them into this highly competitive global system of integrated financial markets. the southern african development community ( sadc ) provides the opportunity for the countries of southern africa to approach the process of global financial integration through first combining forces in a regional cooperation arrangement that will, in a second phase, facilitate the real worldwide integration process. there are, of course, a number of other more localised reasons why financial integration within the southern africa region will hold advantages for all participating countries. these can be summarised as follows : • the expansion of trade between southern african states will be supported by a simultaneous integration of the financial sector. payment and settlements will be facilitated by the removal of unnecessary financial obstructions and constraints. • the extension of services across borders will be made easier. such services can include insurance, business, legal advice and assistance, engineering, architectural, medical, and other professional services. • the movement of people within the region will become easier in support of activities such as tourism, inter - governmental services, exchange of skills, and the mobility of labour. • it is of vital importance for the southern africa region that maximum use shall be made of scarce resources. the coordination and sharing of limited resources such as skills, technological infrastructure and financial systems will contribute to a higher rate of economic development for the region as a whole. what has been

create money can easily be abused for short - term gains, but any excessive creation of money in the short - term will eventually lead to higher inflation ( and therefore higher interest rates ). it is also understood that, because parliament has vested the power to create money within the central bank, this institution must remain accountable to parliament for its policies. ( ii ) cooperation amongst bank regulators and supervisors the governors ’ committee has encouraged bank regulators and supervisors in the region to work together in order to standardise and coordinate policies followed to control the banking system. special attention has been given to : • the implementation of the basel committee ’ s recommendations for capital adequacy ; • the implementation of the bis core principles for banking supervision ; • training of bank regulators and supervisors in the region ; and • identifying and eliminating money laundering and illegal banking transactions. ( iii ) the expansion of training facilities for central bankers in the region the south african reserve bank expanded its training institute to accommodate participants from the other central banks of sadc. we also coordinated our training programmes with those provided by other central banks ( for example, bank of tanzania ) and institutes ( macroeconomic and financial management institute of eastern and southern africa [ mefmi ] ) in the region. our training efforts within sadc are now getting recognition from the international monetary fund and other central banks, such as the bank of england, and can make an important contribution to the improvement of central banking skills in the region. ( iv ) development of the payment, clearing and settlement systems in the region an analysis was made of the existing facilities for inter - bank clearing, payment and settlement systems in each one of the original 12 members of sadc. the sophisticated samos system of south africa, which provides for real - time on - line settlement for large transactions and full daily settlement for smaller transactions, can eventually be expanded to other countries, and can provide a system for cross - border settlement of intra - regional transactions. ( v ) cooperation amongst ( private sector ) banking institutions in the region the committee of governors formed a sub - committee, consisting of the private sector banking institutions in the region, to encourage cooperation at this level. ( vi ) cooperation amongst stock exchanges the association of stock exchanges of the sadc region is making a useful contribution to the development of financial integration in the region. this sub - committee has been instrumental in providing for : • dual listing procedures ; • the reduction of exchange control restrictions ; and • sharing of information technology. ( vii ) harmonisation