Regulatory Alerts2003-06-16
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Bank of Zambia Circular 09/2003 on Foreign Exchange Market Operations
The Bank of Zambia mandates that all commercial banks conduct foreign exchange transactions exclusively through the banking system to support the rollout of a unified interbank market. Direct inter-corporate foreign exchange trades are strictly prohibited to eliminate market segmentation and associated distortions. Banks must immediately notify their corporate clients of these new operational rules and ensure full compliance with the established interbank framework.
BANK OF ZAMBIA
OFFICE OF THE DEPUTY GOVERNOR - ADMINISTRATION
June 16, 2003
CB Circular No. 09 /2003
To : All Commercial Banks
FOREIGN EXCHANGE MARKET OPERATIONS
As you may be aware, the process that has been underway to introduce the broad-based interbank foreign exchange system in Zambia is on the verge of completion. Market segmentation has long been identified as a hindrance to the growth or development of an efficient interbank market and has been known to cause distortions in the market itself. Direct deals between corporates, which have become common lately, are a form of segmentation.
It has therefore become necessary for us to call on all stakeholders to support the new inter-bank system by commencing to conduct all foreign exchange transactions through the banking system as per laid down rules, which have been circulated to you. Kindly note that, henceforth, inter-corporate trades shall not be permitted. All Banks are therefore requested to notify their corporate customers accordingly.
Denny H Kalyalya (Dr)
DEPUTY GOVERNOR - OPERATIONS
Bank Square, Cairo Road P.O. Box 30080, Lusaka, Zambia Tel: +260-1-229930 Fax: +260-1- 222808 Email: fmfula@boz.zm Web: http://www.boz.zm/
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