tom alweendo : prospects for a monetary union in the southern african development community ( sadc ) address by mr tom alweendo, governor of the bank of namibia, at the bank of namibia ’ s annual governor ’ s address, windhoek, 18 november 2004. * * * invited guests, ladies and gentlemen : i am happy to welcome you once again at our annual event, where over the last five years i have shared my views on a number of issues of economic nature. this evening, i am going to share with you my views on the prospects for a monetary union in the southern african development community ( sadc ). this topic is by no means new and it has been discussed by various speakers on various occasions. however, because of its importance it is worth repeating and hopefully we will start building a consensus around the issue. the issue of monetary integration that is meant to ultimately lead to a monetary union on the african continent is being addressed at two levels. the first level of discussion is the continent - wide, where under the african union the continent shall establish a common monetary policy and therefore a common central bank. the association of african central banks ( aacb ) has been requested by the african union to prepare the establishment of the african central bank and the time framework. the aacb has suggested a tentative work program that will see the african central bank being established by the year 2021. the second level of discussion with regard to monetary integration is taking place at regional level, where all five african regions are expected to work on regional monetary integration. in the southern african region, sadc is working on a program where we are going to establish a common central bank in the region by 2016 and a common currency by 2018. the year 2016 sounds far enough, but this is a mere twelve years from now. namibia ’ s position with regard to a sadc monetary union is further complicated by our membership to the cma. at the cma level, we have also started with preliminary discussions that more and more points at the establishment of a cma central bank ahead of the sadc central bank. an argument could be made that since all cma member countries are members of sadc, it will be better for namibia to concentrate on the sadc monetary union discussions. however, this will only be true if one was certain that the sadc discussions will go ahead as per the agreed timeframe. the concern here is that the cma is a de facto monetary union, except that the

confidence and reducing uncertainty. the council also confirmed that any tightening of financial conditions that is not consistent with containing the impact of the pandemic on price stability will be countered resolutely. banks thanks also to the economic support measures adopted by the government, italian banks have kept credit supply standards relaxed in response to firms ’ rising demand for funds. the growth in lending to non - financial corporations remained robust in the fourth quarter, still driven by the ample recourse to public guarantees. the average cost of new loans remains at very low levels. the financial aid measures, the supervisory authorities ’ guidelines on the use of the flexibility built into the rules for classifying loans, and the expansionary monetary policy stance have all contributed to keeping the non - performing loan rate low. the disposal of npls continued, equalling almost €30 billion in 2020, surpassing initial projections. this development was supported by legislation that has enabled banks to convert a portion of their deferred tax assets into tax credits when such assets are sold. because of the ongoing restrictions on economic activity, rendered necessary to contain the risk of infection, the government has extended the moratoriums introduced in march 2020 until next june. this measure, also taking account of the clarifications recently published by the european banking authority, will make it possible to continue to contribute generously to satisfying firms ’ liquidity needs. it is nonetheless essential that moratoriums continue to be a tool to help debtors make it through temporary difficulties, and are not used to conceal clear and irreversible crises. never before have banks been called upon to perform their role with such skill, acting swiftly to improve the outlook for firms facing temporary distress and to set aside adequate provisions for expected losses, in line with the new accounting standards. since the start of the year, the new european rules with which credit institutions and non - bank financial intermediaries must comply have further refined the definition of default for prudential purposes. as we have explained, the ‘ new ’ definition of default does not entail any substantial changes in reports to the central credit register. instead, it affects the way in which financial intermediaries have to classify their customers ’ positions to calculate their capital requirements. as the experience of the four italian banks that chose to switch to the new system as early as 2019 has shown, the new framework seems to have had a limited impact on the stock of non - performing loans. to reduce the impact to a minimum, we have