Third, the heightened aversion of financial institutions to risk has led to fears of a “credit crunch”. A credit crunch occurs when lending institutions try to reduce their exposure to risk and, in so doing, the size of their balance sheets. In recent weeks, the desire of these institutions to reduce the scale of their leveraging and move to less risky portfolios has led to a reduction in the amount of capital available to support liquid financial markets. As a result, asset prices of all kinds have been volatile. So far the consequences of turbulence in financial markets have been largely restricted to securities markets, especially in the United States. These markets are somewhat less important in the provision of corporate finance in the UK, although if the reduction in security market issuance were to persist this could affect the ability of the personal and corporate sectors to obtain finance from both banks and the capital market. As yet lending by UK banks has not been  BIS Review 86/1998  -3-  affected to any significant extent. The monetary statistics published yesterday show that total bank credit grew by 0.7% in September, leaving the 12-month growth unchanged at 8.7%. The MPC will watch carefully for any signs of a credit crunch developing. The Bank monitors indicators of credit conditions in the financial markets on a daily basis.
Therefore wooing investment into this institution should not be difficult task. Such investment will go a long way in enhancing the quality of graduates this Institution will produce. BIS Review 23/2009  1  Mr President, it is during times of crisis such as the one we are undergoing that graduates should assist the industry in coming up with well researched constructive proposals and solutions on how challenges may be addressed within the context of our local environment. The prevailing global financial meltdown is in fact an opportunity for the institute to critically review its core operations and determine if its flagship education and training programmes as well as other learning environment initiatives such as research, consultancy, counselling and continuous professional development activities are robust enough to adequately serve our financial services sector, both in times of buoyancy and during periods of turbulence. Ladies and Gentlemen, I am reliably informed that the Institute is negotiating strategic alliances that will ensure high quality international standard flagship education and training programmes for professionals in Zambia’s financial services industry. I am equally pleased to note that that the Institute has direct representatio n on two working groups of the Financial Sector Development Plan (FSDP) – the Banking Working Group and the Human Resource Working Group. I have no doubt the FSDP stands to benefit from more representation from the Institute. I urge you Mr President and Council Members, to engage all the stakeholders in the financial sector including, Non-Bank Financial Institutions, Insurance Companies, Stock brokers and Pension Funds.