All countries, by means of international agreement have what is referred to as Central
Bank. In the case of Zambia the Bank of Zambia is our Central bank established by an
act of parliament.
The bank Governor and a board of directors run the Central bank. The Governor is appointed by the Republican President and approved by Parliament. (Take note of the current bank governor). The Bank of Zambia, BOZ as it is commonly referred to; is the nation’s banker. Its main customers are the government and commercial banks. Normally, individuals, companies and businesses cannot open accounts with the central bank.
The following are the main functions/ services offered by the central bank
- Issuing bank notes and coins. BOZ is responsible for arranging the printing, minting, storing and circulation of all Kwacha notes and ngwees.
- Keeping the Governments Account . The government has account at the Bank of Zambia from which payments are made and to which revenues are deposited
- Servicing the national debt. The government, just like individuals also borrows money o It is the Central Bank that is supposed to manage these loans.
- Lender of last resort. The Central Bank may lend money to commercial banks as a last resort if they cannot get money from any other source.
- The banker’s bank . All commercial banks maintain a deposit account at the central bank. This makes it possible for the settlement of balances during cheque clearing.
- Supervision of the banking System. The bank of Zambia supervises commercial banks and other deposit-taking institutions, to make sure the banking system in Zambia is strong and customers’ money is safe.
- Banker’s Clearinghouse. The central bank has a department responsible for helping in the clearing of the cheques, which move between the various commercial banks.
- Advisor to the government. The BOZ advises the government on monetary policy matters, such as inflation, taxation and exchange rates.
- Management of the country’s foreign exchange reserves The BOZ controls the amount of foreign currencies that are made available for buying goods and services from other countries. This is called exchange control. The BOZ also makes sure that the value of the kwacha is reasonably stable against other countries