‘Monetary policy to focus on banks stability’

via ‘Monetary policy to focus on banks stability’ | The Herald August 4, 2015 by Conrad Mwanawashe

THE Monetary Policy Statement to be released by the Reserve Bank of Zimbabwe Governor Dr John Mangudya tomorrow will focus on stabilisation of the banking sector, measures to ensure growth of exports and harmonising monetary instruments for economic growth.

Dr Mangudya told the Confederation of Zimbabwe Industries congress in Gweru on Friday that while the banking sector has registered improvement in stability, focus should now be on the growth of the financial services sector.

“I am happy to tell you that banks are in a stable condition. We have seen an improvement in the stability of the banking sector.

“We said by the end of June we don’t want ailing banks and this is true. If anyone tells you otherwise that person has no authority to say what they are saying.

“We are the only ones as monetary authorities who do the dip stick to see whether the banking sector is stable or not stable,” said Dr Mangudya.

After stabilisation focus moves to growth.

He said the second phase will deal with amendment to the Banking Act.

Amendments to the Banking Act will include introducing a Credit Reference Bureau, but most importantly it will introduce penalties for bank owners who run financial institutions down.

“The whole idea is to ensure that going forward we do not have banks, bankers and businesses that are indisciplined.

“We also want to ensure companies grow.

“Why are we talking about production as the central bank? It is because we do not print the US dollar. So our printing press is in industry, we print from exports, Diaspora remittances, loans and from FDI. Those are our four printing presses and therefore anything that disturbs production is our enemy,” he said.

He said some of the problems are a result of the country using instruments that were instituted in the 1970s which are now inconsistent with the current liberalised foreign exchange system.

He said he will have a page on harmonising economic instruments.

Dr Mangudya said the challenges that the country was going through are the aftermath of the transition from the Zimbabwe dollar era to the multi-currency system “because no one was prepared for that”.

“With the US dollar we are now exposed. Companies are now forced to borrow to finance salaries and operations,” said Dr Mangudya.