Regulatory Alerts2020-01-01
Bank of Zambia and Bank of Tanzania Memorandum of Understanding
The Bank of Zambia issued this circular to implement a Memorandum of Understanding with the Bank of Tanzania, mandating commercial banks along the Tunduma and Nakonde borders to facilitate direct currency conversion between Zambian Kwacha and Tanzanian Shilling. All domestic commercial banks must immediately accept the Tanzanian Shilling for foreign exchange trading and invest in counterfeit detection equipment. The two central banks will jointly purchase and repatriate excess currencies, with the Bank of Zambia providing timely updates on Shilling security features to support seamless cross-border transactions.
BANK of ZAMBIA
OFFICE OF THE DEPUTY GOVERNOR - OPERATIONS
BOZ/EXEC/DGO/bcps/bp
January 10, 2020
CB Circular No. : 02/2020
To : All Heads of Commercial Banks
# MEMORANDUM OF UNDERSTANDING BETWEEN BANK OF ZAMBIA AND BANK OF TANZANIA
We wish to notify all commercial banks that the Bank of Zambia signed a Memorandum of Understanding (MoU) with the Bank of Tanzania on September 21, 2018. The MoU seeks to address the informal trade of foreign currencies along the Tunduma and Nakonde border areas that resulted in the proliferation of illegal money changers at the border. Commercial banks and bureau de change on either side of the borders between Tanzania and Zambia have not been accepting to convert Zambian Kwacha into Tanzanian Shilling and vice versa.
The MoU aims to facilitate the acceptability and convertibility of the Tanzanian Shilling and Zambian Kwacha through the formal registered channels of commercial banks and bureaux de change at the Tunduma and Nakonde border areas. The Bank of Tanzania and Bank of Zambia shall purchase the Shilling and Kwacha collected within their jurisdictions and shall be responsible for repatriating excess currencies for onward delivery to the issuing Central Bank.
All commercial banks domiciled in Nakonde are advised to make the necessary arrangements to begin accepting the Tanzanian Shilling as part of the foreign exchange trading business. The implementation of the exchange is with immediate effect. All commercial banks shall be required to invest in equipment for detecting counterfeit bank notes. The Bank shall make arrangements to share information on the security features of the Tanzanian Shilling in due course.
Please be advised accordingly.
Francis Chipimo (PhD)
DEPUTY GOVERNOR – OPERATIONS
cc
Governor
Director – Banking, Currency and Payment Systems
Director – Bank Supervision
Director – Non-Bank Financial Institutions Supervision
Bank Square, Cairo Road, P.O. Box 30080, Lusaka, Zambia Tel: +260-211-399303, 399300, E-mail: dgo@boz.zm. Web: http://www.boz.zm
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