##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

and manage the financial system in a country. why is it important to build financial infrastructure? a sound and robust financial system is a key contributing factor to financial stability in a country. although a definite causal link exists between real economic stability and financial stability, sound and robust financial systems play an important role in reducing the risk that distortions in the real economy will develop into a financial crisis and could even minimise the adverse effects of such a crisis in the event of it occurring. a sound and robust financial system is essential for mobilising capital that is necessary for sustainable economic growth. the major objectives of macroeconomic policy in a country are the level of employment, price stability, gdp - growth as a measure of economic growth and equilibrium on the balance of payments, especially in open economies such as those in the sadc region. domestic financial system weaknesses have potential repercussions on exchange rate stability and the balance of payments. an unsound domestic banking system will be less capable of providing an efficient foreign exchange market and will complicate monetary policy decision making by distorting the link between interest rates, economic activity and inflation. this will by implication make monetary targeting more vulnerable to policy errors. underdeveloped or developing economies are dependant on investment and uncertainty about the soundness of the national payment system in a country may trigger capital flight or deter foreign investors, thereby putting pressure on the balance of payments and deepening economic recessions. this is likely to, in turn, have an adverse knock - on effect on the level of employment and the general inflation level. furthermore, a country that does not conform to international standards and best practices with regard to its financial system, risks isolation from the international economic community. globalisation is a global trend toward the freer flow of trade and investment across borders, resulting in the integration of the international economy. in a globalised world, no country can afford being isolated, as there is no room in a globalised world for an economy isolated from world trade and foreign investment. globalisation also brings many benefits such as access to foreign capital, global export markets and advanced technology much needed in underdeveloped and developing countries. these benefits have positive social and economic consequences such as faster economic growth, which, in turn, alleviates poverty, leads to higher labour and environmental standards and facilitate democratisation. countries that resist globalisation, risk being marginalized. in order to become a role player in regional and international trade, countries have to ensure that