An important principle established by Exter has been that the principal use of OMO was to offset the effects of surpluses and deficits in the balance of payments. Since the surpluses of BOP raises money supply and deficits would do the opposite, it is necessary to counter their effects by an equivalent change in the domestic assets of the Bank. Hence, any OMO to siphon off the additional liquidity created by the Bank by increasing its domestic assets first, i.e., by investing in primary market Treasury bills, is contrary to the wisdom expressed by Exter in his report. Can Exter be faulted for permitting the Central Bank to lend to the government? Though it is completely contrary to the principles of responsible central banking advocated by him elsewhere in the Report, he should be viewed as a pragmatic person. He argued that “if the Government were determined, even in the face of opposition by the Monetary Board to make excessive use of Central Bank credit, legal limitations could be relaxed” by the government. In such a situation, “the Board being a Government agency would have no  BIS Review 92/2007  5  alternative but to comply”. Thus, legal provisions are not of any use if governments do not function responsibly and the civil society is weak in resisting such dangerous moves by the governments.
We at the Central Bank welcome innovations such as empowerment loans but urge caution with products such as Islamic Loans since an innovation of this nature needs close collaboration with the regulatory authority. 7. Closing remarks  In closing, Mr Managing Director, having celebrated your 10th anniversary I urge you not sit on your laurels. May this be a time of serious reflection as you chart your path towards celebrating your next 10 years and beyond! I look forward to Investrust Bank Plc being represented in other countries as well. Regarding the strategic planning session that we are gathered here for, I wish to commend you, Mr Managing Director for coming up with this initiative. Every organization needs to plan its future actions and activities. This is a process that must be embraced by all top management. Although only senior managers are represented here today it is my expectation that what ever you will be discussing will have benefited from lower levels of your bank. For your plan to succeed it is important that all senior managers embrace the plan whole heartedly. With these remarks, I declare the Strategic Planning Conference of Investrust Bank Plc officially open. I thank you all. 2  BIS Review 36/2007