goods and services within the borders of the country. 3. preserving the value of the kwacha both externally and internally the reserve bank ensures that the exchange rate is stable at all times. thus it strives to ensure that : • 4. money that is in circulation in the country should be backed by an equivalent level of foreign reserves. banker and advisor to the government the reserve bank maintains government accounts and manages government domestic debt. 5. banker to other banks in malawi the reserve bank acts a banker to the commercial banks by keeping commercial banks deposits, which can be withdrawn by commercial banks when they run out of liquidity in their vaults. 6. acts as lender of last resort for financial institutions the rbm helps to alleviate liquidity pressure in the financial system. it does this by lending to banks through the discount window. b. delegated functions on behalf of the government of malawi, the reserve bank of malawi carries out the following delegated responsibilities : 1. establishment of money and capital market the rbm is the authority responsible for regulating and supervising the proper functioning of money and capital markets. it is responsible for the development of the capital market and for the provision of rules and regulations for fair and orderly market conditions. 2. supervision of financial institutions to promote financial sector development the bank carries out orderly management and supervision of banks and other financial institutions to protect their liquidity, equity base and ensure their overall viability and stability. 3. issuing of government paper and treasury bills the rbm is vested with the responsibility of issuing local registered stocks and treasury bills as a way of raising resources for government to augment its revenues. the bank also underwrites i. e. meets the difference in case of under subscriptions from the financial sector, the parastatals and the private sector. 4. administration of exchange control the administration of exchange control was delegated to the reserve bank by the ministry of finance on 2 june, 1965. • currently there are no restrictions on the current account. however, the capital account has not yet been liberalised. c. other functions 1. to promote development and economic growth in malawi the reserve bank of malawi implements several measures designed to influence the money supply and availability of credit, interest rates and exchange rates with the view to promoting growth, employment, stability in prices and a sustainable balance of payments position. 2. conducting research collecting and analysing economic data from the financial and other sectors for research and policy purposes. before i conclude, it is important

##ting systemic risk by providing the liquidity needed to oil the wheels of the financial system ; · oversight of infrastructures such as the national payment system as well as financial markets in order to ensure the smooth and efficient functioning thereof ; and · supervising the financial system on an ongoing basis. the central bank acts as the guardian of financial stability, which is necessary to efficiently allocate resources and absorb liquidity shocks. the bank has to continuously and comprehensively monitor potential threats to financial stability. this is necessary for prevention of crises, but in the event that they do occur, also for swift crisis resolution. the central bank should consider regulatory and / or operational intervention in cases where financial stability is threatened. the promotion of the efficiency and effectiveness of the financial system. the central bank is concerned with the robustness of the financial system both on a national and global level as disruptions in settlement in securities markets have the potential to spread to payment systems and to the financial sector in general. the central bank has to ensure compliance with international best practices and standards as laid down by institutions such as the bank for international settlements and the international monetary fund. standards such as the bis core principles for systemically important payment systems and the group of thirty recommendations regarding securities clearance and settlement are the result of collaboration and shared experiences between the major financial institutions in the world and provide a blueprint that a country should consider to become a global player and be internationally competitive. the role of the central bank in this regard can thus be summarised as : · ensuring that policies relating to the efficiency and safety of payment systems are designed to comply with the aforementioned international standards, bearing in mind that the implementation of such standards should be done with the appropriate degree of flexibility to adequately cater for the individual circumstances of each country ; · monitoring, but also participating actively in the development of standards relating to payment systems and cooperating with stakeholders in improving such standards ; and · fostering and developing public policy that supports the financial system in a country. this would include addressing legal and regulatory impediments to the effective and efficient functioning of the financial system. key features of a sound and robust financial system a sound financial system is one that remains stable and efficient in the wake of shocks such as interest rate hikes, severe exchange rate fluctuations, financial crises in other systems, but also noneconomic events such as terrorist attacks. robust financial systems are characterised by three basic characteristics : flexibility, resilience and internal stability. a financial system is flexible in that