The first objective is to obtain the securities at competitive and appropriate prices for the Federal Reserve, as doing so will ultimately benefit the U.S. taxpayer. The second objective is to minimize any negative effects that the purchases might have on the functioning of financial markets. As I noted in a speech in October 2010, the liquidity and efficiency of the Treasury market provide tremendous benefits to our economy, and the Desk was intent on designing a purchase program that would not diminish those benefits in any meaningful way. 3 To achieve these objectives, the Desk relies on a system in which it purchases securities through reverse auctions with a set of established counterparties called the primary dealers. 4 The securities that are eligible for each operation and an indication of the total size of the operation are announced in advance. 5 Dealers then submit offers to sell those securities, either for their own accounts or on behalf of their customers, over a 45-minute period on the morning of the operation. Those offers are assessed by the Desk based on two criteria: their proximity to market prices at that time, and an internal methodology for comparing the relative value of the securities at the offered prices. 6 This process occurs over a proprietary trading system called Fedtrade under the oversight of Desk staff, and the results are typically finalized and published within a few minutes of the close of the operation.
While facing numerous and difficult challenges, the country has continued to produce university and college graduates of international standards year in year out. This situation would not have been possible, had it not be for the past tremendous contributions and personal sacrifices made by a number of citizens under the guidance of leaders who had great foresight and fortitude. The dedication and ingenuity of our teachers and lecturers both in the past and today, have also massively contributed to the economic development we have achieved to date. I have no doubt that our nation needs more of such outstanding and dedicated citizens at all levels of society to take our country’s development to a higher level. Mr President, as we speak, Zambia’s economy is facing numerous challenges emanating from the global financial turmoil. As you are no doubt aware, the crisis has already resulted in a reduction in commodity prices including that of copper. The Zambian foreign exchange market has also been partly affected as is reflected in the volatility and weakening of the Kwacha exchange rate in the recent past. The result of all this is lower Government revenues and more expensive imports which would in turn culminate in higher inflation. Unfortunately, for a low income country like Zambia, lower Government revenue entail lower spending on social amenities including Education and Health. High cost of goods and services also mean that most of our citizens would not afford to educate their families.