Bank of Zambia

Zambian Kwacha

Http://www.boz.zm

Bank of Rhodesia and Nyasaland

The Bank of Zambia ( BoZ ) is the central bank of Zambia. Its central task is to formulate the monetary and prudential policy objectives and enforce secure the stability of monetary and financial system of Zambia. The seat of the BoZ in Lusaka.

History

The history of the Bank of Zambia dates back to the Southern Rhodesia Currency Board, which was established in 1938 in Salisbury. Its legal range was due to an agreement to Northern Rhodesia, now Zambia, and Nyasaland, now Malawi. In 1954 it received the name of Rhodesia and Nyasaland currency board and became the property of the Government of Rhodesia and Nyasaland.

Currency boards are not central banks. They do not offer services such as banks. Their sole function is to provide the money, while central banks also perform control functions for the monetary and financial market. In the case of the Central African Currency Board and its predecessors which meant a 100 percent coverage by reserves in London in British Pounds Sterling. The result was that the money supply grew up with the reserves or did not melt, with the economic power.

Soon the discussion on the establishment of its own central bank was getting louder. It was clear that monetary policy played an important role in economic growth, mainly through the granting of loans. This was offset against the strict rules of the currency board crass, not even able to respond to cyclical fluctuations. In addition, it was criticized that the quantity of money in Rhodesia of the reserves in London 100 percent is dependent on what would enormously bind much capital that would be needed for domestic investment.

Nevertheless, the currency board was able to keep a good while, because it was a tiny organization and easy to manage. In addition, it disciplined the public sector, because the government could not borrow money to the Board. This has kept inflation close to zero. This experience, but the lack of a poor, may have played a role in the 1970s and 80s, when the Zambian government borrowed large amounts of money at the Bank of Zambia to boost the economy so but created an inflation, the citizens of the the purchasing power withdrew.

The founding

The Bank of Rhodesia and Nyassland, ie a central bank that was founded in March 1956. You have from the outset through the usual powers of the monetary policy, the monetary reserves, a bank for government and banks. The bank could lend to governments and government up to a certain, set by the anticipated tax revenue a year limit.

The Bank of Zambia was launched on August 7, 1964 to life when she took over the Bank of Northern Rhodesia. The law, however, this was only adopted in June 1965. The Bank of Northern Rhodesia, in turn, was created in September 1961 from the Lusaka branch of the Bank of Rhodesia and Nyassland. On December 31, 1963, the Federation of Rhodesia and Nyasaland broke apart.

The BoZ started with 100 employees in two departments, specifically the chief cashier and the personnel department. The chief cashier had previously been responsible for the enforcement of monetary policy decisions, monetary affairs, banking policy, government securities, exchange control and management.

Over time, the number of departments grew. The first came in 1967, a research department to do so. The Operations Department was created in 1976 and then especially in the 1980s more and more. Personnel and Administration in 1977, foreign exchange controls, import and export control, investment and property, all in 1981, followed by banking and monetary matters, medium-sized industrial, inspection in 1982, as well as national debt, transport, government securities in 1984.

The number of divisions of the BoZ grew with the increase in their functions that were assigned to it by the government. Since these exercised a dictatorship, and therefore particularly with foreign exchange controls and import and export controls excessive regulatory acted on the economy. Then there was a need for enhancing the banks of auxiliary services for these areas. The BoZ himself made fewer and fewer differences between major and minor areas of what their costs could skyrocket. So they offered their employees not only a hotel, which was quite common, but furnished this also in many cases. The management of such a kind property requires considerable staff. In addition, the policy always presented unerfüllbarere wishes to the BoZ. In the preface to Ter 'Years of Banking in Zawhia, a publication of BoZ, wrote the then President Kenneth Kaunda:

At that time it was a common position in developing countries. Something similar can be read at this time also with a view to the Reserve Bank of India. For the BoZ this meant another department, this time for the promotion of small and medium-sized enterprises. Accordingly, the number of staff increased from 400 in 1975 to 1,226 twelve years later and further to 1,400 in 1994, which led to new buildings. In Lusaka, a new BoZ - building was inaugurated in 1975 and established in 1979 in Ndola, a regional branch. Both complexes had to be constantly expanding.

During this time the BoZ responded more frequently to external employment needs and not on the actual needs of their function as a central bank, as one reviewer wrote in 1989. This also a permanent change at the top of the BoZ had contributed to his own. Since 1964 there were ten governors in 28 years, resulting in a residence time on the post of 2.8 years, which could secure neither continuity nor strategic planning nor future tasks somehow.

The new tasks

The Bank of Zambia Act of 1965 and its subsequent amendments entrust this organization with the usual responsibilities of a central bank to be like the bank of the government to manage the physical money and foreign exchange reserves to control the liquidity of banks and ensure as well as the monetary policy objectives and to determine implementation. Although price stability in the law as one of the objectives of the BoZ is set, it enjoys no special meaning in practice. This is not specific Zambian. Many central banks in Africa have only understood the relationship between inflation and employment over time. In Zambia, the result that the BoZ shares of the Development Bank of Zambia and the Zambia National Commercial Bank acquired in order to enforce economy and thus employment policy objectives concrete can. This puts them in a position, for example, to develop a huge estate and operate. Whether that is the job of a central bank, is another question.

Meanwhile, the insight has generally enforced by central banks, best contribute by maintaining price stability to that of the macroeconomic equilibrium. Likewise, the salutary disillusionment sets slowly that a central bank can promote the general welfare by providing cheap money available and it accepts a higher inflation. In this goal in mind, the BoZ is geared towards getting stronger in order to secure future economic growth and employment, ie to liberalize the economy and to allocate market forces a greater role.

Since 1991, the BoZ changed their policies accordingly. This had numerous frictions result, not least because other authorities had not learned their lessons. Privatization and liberalization are not possible without consistent approaches. Not everything can and must be privatized and not everything can and must be liberalized. But this lesson has yet to be learned in Zambia by all stakeholders, including from the BoZ. But price stability and a robust financial system are already important goals that can be achieved.

The BoZ has modernized since 1998, the payment system of the country gemäßt the guidelines of the Basel Committee and converted to electronic payment systems, in particular an electronic clearinghouse, which aims to accelerate the postings among banks. Since this involves a considerable number of risks, a framework law on electronic payment systems is being worked out. However, the time of the collapse of this system seems to be over.