Financial crises are much more likely to be associated with corrections of asset values where asset purchases have been financed with debt rather than equity. Aggregate global debt – public, private and financial – is now around 320% of global GDP, close to its record highs. Excluding financial sector debt, the debt of the real economy is around 240% of global GDP.6  But aggregates can only tell you so much. And they can hide a multitude of sins. We need to need to look not just at the level of the total, but the growth rate and sustainability. And we need to drill down into the composition to see where the risks are most prominent. Growth, level and sustainability  Research suggests that it is the growth rate of debt rather than its actual level that is the leading indicator of financial crises. Bank of England work based on 130 downturns in 26 advanced economies since the 1970s suggests that a rapid build up of debt is the best early warning indicator of a recession.7 Other academic work supports this conclusion.8  The actual level of debt matters rather in determining the depth, as opposed to the probability, of the crisis. So we need to look at the growth rate as well as the level. 6  See IIF Global Debt Monitor. Of the 317% of global debt to GDP, 60pp is household debt, 90pp is to non-financial corporates, 86 is government, and 80pp is financial corporates.
Fellow Members of Staff, Invited Guests, Ladies and Gentlemen, as we move ahead and look to the next 50 years of Central Banking in Zambia, the Bank of Zambia will continue to play catalytic role in facilitating the exchange of ideas among financial sector players and all other key stakeholders. BIS central bankers’ speeches  1  Today, we are here to officially launch the celebrations of 50 years of our existence. I would like take this opportunity to inform you that a number of activities have been lined up to commemorate this wonderful occasion. These include: 1. An international symposium to discuss selected pertinent to the Bank of Zambia and in line with the theme of our celebration, scheduled for 7th August 2014;  2. An exhibition dedicated to the history of the Bank of Zambia;  3. The publication of a book on the History of the Bank of Zambia;  4. The launch of a book on Economic Policies in Zambia;  5. A national school quiz; and  6. A family day to show our gratitude to the families of the members of staff for their support in our execution of the Bank’s mandate. Ladies and Gentlemen, it is our expectation, therefore, that all members of staff will take part in the upcoming activities in order to make the anniversary celebrations a success and memorable.