This is, in my view, the best way to allow banks to play their full role in the economy and ensure a fair deal for businesses and consumers. Recently, we have signed an MOU with the Competition and Consumer Protection Commission aimed at enhancing the competition arrangements in the banking sector. We hope to strengthen capacity to tackle anti-competitive behaviour in the sector. I would therefore, like to encourage you to start viewing these areas as an intricate part of your overall business strategies in order to enable us as an industry to consolidate the gains so far achieved. Ladies and gentlemen, let me acknowledge the commitments that the Bankers Association has made in the revised Code of Banking Practice relating to the provision of “No Frills Account” to certain segments of our population. As the central bank we will be interested to receive information on how you are performing in this important area for financial inclusion. On our part, we have issued a “Practice Note” to assist commercial banks overcome some of the Know Your Customer challenges faced with when dealing with some segments of our society. Chairperson, let me conclude by reiterating the important role that a healthy and stable financial system plays in an economy. This objective cannot be achieved by the Bank of Zambia alone but through collective efforts including the Government and yourselves. My expectations are that although the role of Chairperson has changed, the Association will remain true and steadfast to its values and objectives.
On top of this, the agency that would be operating the fund – presumably the European supervisory agency – would also have the power to reconstruct banks. Efficient supervision and crisis management may also warrant arrangements for prompt corrective action and structured early interventions. As far as I know, most EU countries lack the rules on how to handle large bank failures, which means it would also be very positive from a point of view of contingency planning and reducing moral hazard. With a strong legal framework, the EU would be able to let investors in even the largest banks take full financial responsibility. When it comes to crisis management, coordination of emergency liquidity assistance is also imperative. Today, there are some legal uncertainties remaining for national central banks considering providing cross-border liquidity support. One example of the effects of this is that differences in national lists of eligible collateral will probably lead to gaming situations. A more centralised lender-oflast-resort function is probably necessary. Here it can be noted that the Treaty does allow for a more prominent role for the ECB in this respect than it presently has. However, a number of problems remain to be solved first. Even in the presence of burden sharing arrangements for crisis resolution, one would have to come up with ways to avoid gaming of collateral. Merely extending the list of eligible collateral for emergency liquidity assistance will not do the trick.