But it is not clear to me what this would be intended to achieve. Apart from the simple fact that the Bank is already in the market every week offering to buy corporate bonds, and we have been doing that for nearly four years, this aspect of the capital markets is functioning well in terms of providing credit to businesses. Any firm that has an issuance programme – typically the larger firms with credit ratings – can issue whenever and whatever bonds they choose at historically low interest rates. The backstop to corporate bonds provided by the Bank’s operations is still there – but it is not being used much because it is not needed. The power to intervene in credit markets is one to use cautiously. Any intervention by the public sector carries the risk of creating distortions. Usually, we intervene because there is a demonstrable failure of private markets – so that the central bank is undoing distortions caused by other factors. Buying private sector paper also carries the risk of credit losses – ultimately of public money. And it is a very short step to cross the boundary from seeking to improve credit supply generally to determining the credit allocation between individual borrowers – which the central bank is neither equipped nor empowered to do. That is best left to private markets. When a central bank – or any public authority – takes actions, it has to remember that the precedent of that action can be as powerful as the action itself.
Caleb M Fundanga: Brief summary of economic and financial developments in Zambia Speech by Dr Caleb M Fundanga, Governor of the Bank of Zambia, at the official launch of Standard Chartered Bank Crossroads Branch, Lusaka, 25 September 2007. *  *  *  The Chairman of Standard Chartered Bank Zambia, Mr George Sokota Members of the Board of Directors of Standard Chartered Bank Zambia The Managing Director of Standard Chartered Bank Zambia, Mr. Tom Aaker Distinguished Guests Members of the Press And may I simply say Ladies and Gentlemen I am very pleased to be here today to officially open the new Crossroads Branch of Standard Chartered Bank Zambia. Mr. Chairman, as I have stated at various fora before, it is important for banks in Zambia to take the lead in implementing actions, which contribute to the development of the financial infrastructure and support the development of our economy. As you may be aware, Ladies and Gentlemen, we would like banks to: •  Open new branches, such as this one, to enhance convenience for our people to access banking services, thereby improving financial service delivery and empowering our citizens;  •  Provide loans to the productive sector to support economic activity, such as Mr. Sokota just described; and  •  Invest in latest state of the art technology, such as Standard Chartered’s new electronic Branch Banking platform.