While that could be useful in the longer run, I don’t think that is essential to make this resolution tool work. Moreover, operating on the capital structure of a holding company can cut through some of the complexity, since topco debt is structurally subordinated to the debt and other obligations of the bank operating companies it owns. A final thought before moving on to a possible resolution strategy for a different type of SIFI. What I have been describing is not a matter of designing new instruments with terms that automatically trigger a pre-determined write down or conversion into equity, which would essentially be a putative form of “Tier 3” capital. Today’s topic is rather the toolkit the authorities need, in a statutory resolution regime, to maintain order when all such instruments have converted, all other options are exhausted and liquidation beckons. But whether via contractual terms or under resolution, debt can add to a bank’s loss absorbing capacity. The resolution of deposit-funded international commercial banking groups We should not assume a monolithic approach to resolution. It is not a case of one size fits all. What I have described could work for banking groups that issue plenty of debt. It would not work so easily for groups operating commercial banks around the world that are funded pretty well entirely from insured deposits. If they haven’t issued bonds, then there would be no bond holders to bail in.
The Bank of Zambia therefore welcomes this Workshop as it bodes well with our strategic objective of increasing access to financial services to 50% of the population by 2015 from the current level of 37.3%. As I conclude, I want to assure ATI that the proposal for the Bank of Zambia and all Central Banks in the COMESA Region to relax the capital reserve rules, by considering applying a lower risk weight on transactions that banks and financial institutions have insured with ATI is receiving active consideration within the organs of the COMESA Central Bank Governors. Let me commend ATI for coming up with this innovative initiative which seeks to deepen our financial markets. Finally, I challenge all of you this morning, especially participants from commercial banks to explore ways on how you can improve your products and services to better serve the entire Zambian population with the products that ATI will present to you this morning. Distinguished Guests, Ladies and Gentlemen, it is now my pleasure to declare the African Trade Insurance Agency’s workshop for bankers officially opened and I wish you fruitful deliberations. I thank you for your attention. 2  BIS central bankers’ speeches