The bank of Zambia says the threats to inflation arising from developments in the financial markets will erode citizens’ incomes and welfare if left unchecked.
Central Bank Assistant communications Director Besnat Mwanza says this is why the decision was made to change the statutory reserve requirements.
Ms. Mwanza has reiterated that the market development imposes significant costs to the economy and the public through its adverse impact on inflation especially citizens who have fixed incomes with no means or mechanisms of hedging themselves against the shocks.
She says continuous depreciation of the local currency triggers defensive mechanisms among businesses and others with the capacity to hedge themselves.
Effective 23rd December 2019, commercial banks will be required to hold 9 percent of their deposit liabilities as statutory reserves with the Bank of Zambia from the current level of 5 percent.
Threats to inflation will erode citizens’ incomes if unchecked – Bank of Zambia
