of responsibility, and in a good number of financial and non - financial businesses, disregarded these cardinal guiding principles of good corporate governance and conveniently forgot that what is legal is not necessarily ethical. in the end, the financial and economic structure could not bear the weight of accumulated lapses ; so, it collapsed. while all this is now water under the bridge, it has been recognised in some quarters that the international accounting standards contributed more than their fair share to the financial crisis. it is pointed out that one new standard abandoned the traditional prudent principle of historical asset valuation and replaced it with a highly subjective and pro - cyclical “ fair value ” concept. as a result, brokers, analysts and investment bankers abused the standard. the upward movement of stock prices immediately inflated balance sheets which, in turn, further inflated the asset price and, when the economic downturn set in, the bubble eventually burst. it was known that the paper profits resulting from inflated asset book values could not be realised ; and yet banks and other non - bank institutions took inordinate debt issuance risks. in addition, the “ fair - value ” principle was not much understood by the market, and was not transparent. in the event, balance sheets were hardly a useful basis for decision - making by economic agents. the far reaching economic and social consequences of this accounting practice are now a matter of record. distinguished ladies and gentlemen, it has been said that war is too serious a business to be left to the generals only. likewise, it is now widely recognised that accounting is too important a profession to be left to accountants only. indeed the united states of america and the european union recently took measures to “ soften ” or dilute, as it were, the deleterious effects of “ fair - value ” accounting practice in financial institutions. another emerging change is the call for more disclosures in accounting standards with which those of us outside the profession are grappling, obviously with the helping hand of accountants. long gone are the days when accountants confined themselves to the boring ivory tower of “ number crunching ” or, as at times pejoratively referred to, “ bean counting ”. in fact, it has been said that accounting has now entered a golden age ; an age of the changing role of the accountant ; an age of wide - ranging roles that include professional business advice, planning, reporting, identification of value drivers and risk mitigation. in particular, it is increasingly desirable that the

of botswana has, for more than 10 years now, insisted that domestic banks should maintain a capital adequacy ratio of 15 percent, which is more than double the new basel committee ’ s minimum requirement. it should not come as a surprise, therefore, that, throughout the financial crisis, the domestic banking sector remained well capitalised, sound and profitable. while on the subject of the domestic banking sector, let me digress a bit into an example of the bank of botswana ’ s accountability to stakeholders on delivery of all its mandates, which include monetary policy, the objective of which is to maintain low, predictable and sustainable level of inflation. in meeting the inflation objective the bank absorbs the banking system ’ s excess funds by issuing bank of botswana certificates, thus containing undesirable credit growth and determining the appropriate level of the bank rate. there is no doubt that not issuing central bank paper in the form of bank of botswana certificates to absorb excess liquidity in the banking system would be inflationary and destabilising to the economy. and yet there is a view in some quarters that the cost of absorbing excess liquidity is too high, and banks would do the right thing if left to themselves ; that somehow, the bank is enriching commercial banks. the bank of course disagrees with these views. in fact, the “ leave - banksand - their - excess - funds - alone ” view runs counter to experience world - wide. on the contrary, banks cannot be left to accumulate excess money and be expected to do the right thing. in fact, it would be the height of irresponsibility if the bank were not to intervene in the face of the continuing excess liquidity that is exclusively in the banking system. indeed accountants, such as yourselves, would be concerned about unhealthy balance sheets resulting from, among others, the vagaries of what would no doubt be runaway inflation, as was the case for several years before bobcs were introduced in 1991. with respect to the banks ’ responsibility of reigning in inflation by managing banking system liquidity and credit expansion, there is the related need for banks to encourage financial saving. it is well known that bank lending and investment which are a basis for the country ’ s development cannot increase without attracting a faster rate of accumulating savings. the bank is concerned that household voluntary savings rates are low, while borrowing levels are high compared to countries at a similar level of development. commercial banks must, therefore, seriously