Regulatory Alerts2002-01-01
CB Circular 11/2002: Conversion of Commercial Banks' Foreign Currency Statutory Reserve Balances from Kwacha to Foreign Currency
The Bank of Zambia mandates the conversion of the remaining 75 percent of commercial banks' foreign currency statutory reserve balances from Kwacha into foreign currency to lower funding costs and stimulate credit availability. Following a partial 25 percent conversion in April 2002 that released approximately K36 billion into the banking system, the central bank observed no corresponding decline in commercial lending rates. Consequently, the regulator explicitly requires commercial banks to honor their commitments and reduce lending rates as the tranche-based conversion process continues.
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