example. the bank is keenly aware that key legislation is out of date or missing. regulations to support the growth of electronic payments have been finalised, while both the bank of botswana act and banking act are in the process of revision. the bank is also providing strong support for key developmental initiatives, including the development of the government bond market, within the established parameters of fiscal discipline, both through more active primary issuance and supporting the secondary market through establishment of a central securities depository. third : as i have already indicated, central banks should invest time and resources to have necessary awareness in developments in ict. here, the subject of distributed ledger technologies ( dlt ), fintechs and crypto - assets comes to mind. fourth : where practicable, there should be some scope for easing the burden of regulations to allow innovations to be tested. here, a particularly promising approach is the use of so - called regulatory “ sandboxes ” and other proof of concept frameworks, adopted by many jurisdictions including singapore, indonesia, canada and, nearer home, in south africa, where the south african reserve bank, working alongside commercial banks, recently successfully led the " khokha " project to test the viability of dlt for processing wholesale interbank payments. such sandboxes allow smallscale experiments under live conditions while being exempt from some legal requirements to keep down start - up costs and remove constraints on innovation. fifth : in scrutinising innovations in financial services, a simple five - fold test should be applied : is it a solution to a real economic problem, in a cost - effective way ; does it offer a better service ; is it faster ; does it democratise access ( improves financial inclusion ) ; and, are there serious negative side effects? many recent developments, notably the use of mobile payments systems, would pass these tests with flying colours. in contrast, despite the headlines and the hype they generate, the so - called crypto - currencies, such as bitcoin and ethereum, at least at their present state of development, would fail on all counts. for example, these crypto assets cannot serve as a reliable unit of account, trusted store of value or universally accepted means of payment. by the way, bitcoin turns 10 today. in conclusion, paul volcker, the former chairman of the united states federal reserve, once famously said that the atm was the only really useful financial innovation in banking. this was undoubtedly going

excess liquidity. in turn, this resulted in a period of rapid credit growth by commercial banks, compared to a slower increase in deposits ; thus resulting in a sharp increase in the intermediation ratio, which is simply a ratio of bank loans to deposits. this ratio increased from 53. 1 percent at the end of 2010 to 87. 6 percent in a period of four years to the end of 2014. in essence, funds previously held in bobcs have been diverted to loans by banks and more than doubled – growing by 104. 3 percent, from p22. 1 billion in december 2010 to p45. 2 billion in january 2015. these funds have been effectively absorbed by the economy, to the benefit of businesses and households. deposits increased at a slower pace of 31. 7 percent from p40. 4 billion to p53. 2 billion in the same four - year period. the slower growth in deposits is possibly due to, among others, sluggish growth in incomes, inadequate financial inclusion, more streamlined procedures for government funding of parastatals and very low interest rates paid by banks on deposits. as funds available for lending become exhausted, it is inevitable that credit expansion would slow down. however, credit has continued to grow at a robust pace, as evidenced by the january 2015 annual growth rate of 13 percent, which is higher than nominal economic growth. in situations of tighter liquidity, banks tend to tighten lending criteria, while taking bis central bankers ’ speeches measures to boost deposits. even then, current developments do not suggest that new lending will cease completely, as growth in deposits remains positive. it is indeed imperative that banks undertake measures to attract deposits, and focus on productive use of more limited funds available for lending. more emphasis on deposit mobilisation and improved financial inclusion would be steps in the right direction towards a more mature banking sector. there are also complementary measures that the bank of botswana stands ready to undertake in support of banks as they review their operations in an environment of reduced liquidity. these include a reduction of the primary reserve requirement and enhanced access to bank of botswana lending facilities. it is with this in mind that i wish to take this opportunity to inform you and, through you, all stakeholders that the bank of botswana has decided to reduce the primary reserve requirement for banks from the current 10 percent to 5 percent, with effect from april 1, 2015. this will release a total of p2. 3 billion to augment the banks ’ loanable funds. thank