Mr. Chairman, the near collapse of the financial system has in turn led to a rapid and deep global recession – the sharpest since World War II and the first in which all regions of the world were suffering a downturn in fortunes at the same time. This downturn may well have its most devastating impact on poor countries, particularly in Africa – who incidentally were not responsible for the crisis. It is worth asking the question that if the basic insights on the powerful impact that a lack of information could have on markets was known as far back as 1970 – why were these lessons not assimilated into the policy making tool kit of central banks or in the financial architecture of our economies? BIS Review 95/2009  1  Mr Chairman, I have no doubt that perhaps a large part of the answer to this question is in the fact that the 1970s had a very different financial environment when compared to our current environment. As the financial markets developed, driven by technological and financial innovation and the deregulation of financial services, financial institutions were able to price and sell risks through ever more complex financial products. The very nature of complexity of these products created the asymmetries in information that has proved catastrophic to the world economy.
I must admit here that initially this seemed to cause more harm than good – a little knowledge truly did seem a dangerous thing now that we had opened ourselves up to the media. The greater access to central bank officials and information, e.g. through our website, without the full understanding of issues on the part of journalists seemed to fuel erroneous stories. However, our perseverance over time has meant that the level of understanding and quality of questions has improved significantly. As a result, the level of reporting has also improved – although much work still needs to be done. Today issues surrounding the causes and likely impact of the global financial and economic crisis have been covered in a more balanced way with a greater thoughtfulness on the economic linkages and Government policy – as well as with increased reference to related developments around the world. Mr. Chairman, following on from the media seminars, six years ago the Bank of Zambia began conducting seminars for members of Parliament – particularly members of oversight committees such as the Committee of Economic and Labour Affairs and the Public Accounts Committee. Again, what we have seen is a greater appreciation by members of Parliament of the challenges facing the central bank in the implementation of monetary policy in particular and economic policy in general because the central bank is often called upon to comment on the Government’s economic policies as well.