up of the bank of zambia, which is the central bank, and 13 commercial banks, with a branch network of 159 as at end - december 2005 compared to 123 in 1990. • commercial banks have improved the range of products offered to customers, in line with global innovations. these include automated teller machines ( atms ), foreign exchange accounts, visa, mortgages, and leasing services. in 2005, 4 commercial banks launched the e - switch facility to allow their customers to share their atms and other payment delivery channels, like point of sale terminals. these services were unheard of before the reforms and were supported by the international community. • commercial banks have also embarked on other initiatives including expansion programmes based on the community banking concept. this is consistent with the rural banking concept and is intended to provide financial services to those sectors of the community that are not currently serviced by the banking sector. your excellency, to meet the challenges which come with an expanded banking sector and in our desire to continue modernising the overall financial sector, it has been imperative to strengthen the prudential and supervisory mandate of the bank of zambia. in this regard, the key initiatives that have been endorsed, with an ultimate goal of promoting safe, sound and efficient operations have included : • the enactment and amendment of the banking and financial services acts in 1994 and 2000, respectively. • the implementation of the banking supervision application project, aimed at supporting banking supervision and providing a framework for supervision with the view of having a safer financial sector distinguished ladies and gentlemen, in order to promote greater access by the population to banking and financial services, the following have been implemented : • establishment of an automated electronic clearing house in 1999, ( to speed up processing cheques from 4 - 10 days for local and country checks, to 2 - 5 days, respectively ), enhancing the security of cheques and introducing machine - readable cheques. • establishment of a direct debt and credit clearing system ( ddacc ) and a realtime gross settlement system ( rtgs ) called zambian interbank payment and settlement system ( zipss ) in october 2001and june 2004. the ddacc system has facilitated the transfer of money by electronic means for payment of bills and salaries while rtgs allows a speedy, safer and large value clearing facility. commercial banks have also set up a foreign currency cheque clearing system. • the adoption of the financial sector development plan ( fsdp ). this is a framework which aims to promote the development

policies that would respond to idiosyncratic national conditions. accordingly, a fiscal brake at the eu level, codified in the stability and growth pact, was designed to prevent fiscal profligacy, preserve fiscal space and hence allow automatic stabilisers to play out in full during downturns. moreover, country - specific shocks were expected to become ever less important as the euro would spur market integration and the flexible single market to allow an easy and fast rebalancing after such shocks. however, the scale of the shock after the 2008 financial crisis was unprecedented in a number of countries and it far exceeded their national shock absorption capacity. the euro area had no mechanisms to provide financial support for countries in difficulty and stave off cross - border contagion ; there were no area - level institutions to prevent governments from bis central bankers ’ speeches being pulled down by their domestic banking systems. this underscored the pitfalls of a design that relies exclusively on the national level to fulfil the stabilization function. third, we have learned that governance of economic policies at the eu level has to be broader and deeper than anticipated prior to the crisis. besides fiscal surveillance, which essentially focused on public deficits, 1 there was believed to be no need to closely monitor macroeconomic imbalances and disequilibria on the labour, product or financial markets. disequilibria originating from the private sector were supposed to be only short - lived and eliminated by market forces. the data clearly show that this was insufficient. between 1999 and 2007, the ratio of public debt to gdp in emu declined on average by 5. 6 percentage points. the improvement was by large the result of favourable economic conditions rather than concrete fiscal consolidation measures which should have aimed at approaching the reference value of a 60 % gdp to debt ratio at a satisfactory pace, as the treaty prescribes it. in some countries – as we all know – the sovereign debt dynamics were much less favourable than the euro area average. nevertheless, the accumulated private sector imbalances seem to have far exceeded those in the public sector. in the same period – between 1999 and 2007 – the ratio of private sector debt to gdp increased by 26. 8 percentage points. also for the same period, in the stressed countries, the cumulative increase in the private debt ratio to gdp versus the public debt ratio, amounted respectively, to 49 and 24 per cent for portugal, 75 and minus 35 per cent for spain, 101 and minus 10 per