denny h kalyalya : expansion of zambia ’ s banking sector remarks by dr denny h kalyalya, deputy governor - operations of the bank of zambia ; at the official opening of bank of china ’ s new premises, lusaka, 9 december 2008. * * * • honourable minister of finance and national planning, dr. situmbeko musokotwane, mp ; • his excellency – the chinese ambassador to the republic of zambia ; mr. li qiangmin ; • managing director of the bank of china ( zambia ) limited ; mr du qiang ; • distinguished invited guests ; • ladies and gentlemen. i am greatly honoured for having been invited to speak on the occasion of the official opening ceremony of bank of china ’ s new premises. ladies and gentlemen as part of the on - going zambia - chinese relationship, the bank of china was established in 1997. since then the bank has recorded tremendous progress. distinguished invited guests during the past 8 years, the overall financial performance and condition of the banking sector has been satisfactory. the sector has continued to expand and we anticipate increased economic and investment activity in the period ahead. banks are expected to continue to provide the required level of finance to consolidate the economic gains registered so far. the bank has achieved tremendous growth since its inception in 1997. during the last eleven years, total assets have increased by 325 % to k507. 9 billion in october 2008 from k13. 8 billion in december 1997. regulatory capital increased by about 1, 000 % to k41. 9 billion in october 2008 from k3. 8 billion december 1997. similarly, the bank ’ s profitability has steadily increased over the years. the bank has been a good supporter of a number of economic activities in zambia, especially in the mining, textile, construction, banking and agriculture sectors. however, going forward, we wish to encourage the bank to invest more in loans and advances, which have remained low at 4 % of total assets as at end of october 2008 compared to the industry average of 45 %. ladies and gentlemen the new offices being commissioned today should enhance the bank ’ s service delivery to its customers. we therefore wish to encourage the bank to continue playing an active and effective role in stimulating economic activity through the provision of well structured financial products and services. thus, boost growth in key sectors of the economy as well as enhancing access to finance and encourage more indigenous zambians to establish relationships with the bank. it is our expectation

complicate how counterparties and markets respond in conditions of stress. • the increased risk of terrorist attacks and increased sophistication of cyber attacks on electronic networks have added new dimensions to the traditional concerns of safety and soundness and operational resilience. these broad forces present significant challenges for payments participants, system operators, and central banks. deciding how we meet these challenges raises the classic tension about how to balance the public benefits of greater stability and the increased costs that are the price of the additional margin of safety. we believe the systemic importance of the payments infrastructure means that central banks and system participants have a common interest in acting together to address the evolving risks. let me identify some of the major priorities we see in this area that require further collaboration. higher standards for the core of the system during the past few years, central banks and securities commissioners have developed new standards for the design, operation, and oversight of payments and securities settlement systems. these new standards have been proposed for incorporation in the federal reserve ’ s policy statement on payments system risks. we are in the process of working, together with other u. s. supervisory and regulatory agencies, to assess the extent to which the affected u. s. systems meet these new standards. we feel that it is especially important for the entities that form the heart of payments and settlement systems to work toward higher standards for safety and soundness and operational resilience. given the increased scale of activity handled by these entities, the greater concentration among the major participants, and the increased exposure to cross - border activity, these systems today need to meet a more exacting set of standards, and of course this is also true for entities that are less systemically important. more specifically, we would like to see a greater focus on strengthening risk management practices and ensuring that the financial resources of system operators are adequate to deal with the risks to which they are exposed. we also would like to see a more determined effort to provide more transparency and clarity in these systems ’ procedures and settlement activity, so that participants and members have a heightened understanding of their obligations and exposures in a situation that would test a system ’ s risk controls. the safety and soundness standards for payments and settlement infrastructure have been complemented by sound practices for operational resilience. during the past three years, core clearing and settlement organizations in the u. s. have come a long way toward meeting more demanding objectives for recovery and resumption. going forward, it is important that the major