A financial system comprises institutional units and markets that interact for the purpose of mobilising funds for investment and providing facilities including payment systems, for the financing of commercial activity. On one hand, the primary role of financial institutions-units in the system is to intermediate between those that provide funds and those that need the funds, typically transforming and managing risk. On the other hand, financial markets provide a forum within which financial claims can be traded under established rules of conduct.
To effectively contribute and foster sustainable economic development, it is essential to have a stable and efficient financial system. In this regard, the Financial Stability function of Bank of Zambia endeavors to achieve a financial system that is resilient to shocks and is able to smoothly conduct its core tasks of:
- Intermediation of financing;
- Transmission of payments;
- Pricing of instruments and;
- Redistribution of risks appropriately.