MUSOKOTWANE ON ROPOSED PROHIBITION OF FOREIGN CURRENCIES USAGE FOR LOCAL FINANCIAL TRANSACTIONS & PHASING OUT OF CHEQUES
(Excerpts Statement Delivered To The National Assembly By Dr. Situmbeko Musokotwane, MP, Minister of Finance & National Planning)
Madam Speaker, I thank you for the opportunity to address the issue raised by Hon. Anthony Mumba, Member of Parliament for Kantanshi Constituency, on the proposed ban on the use of foreign currencies for local financial transactions and the phasing out of cheques.
Both matters pertaining to the proposed foreign currency regulations and the phasing out of cheques are draft proposals that are being presented by the Bank of Zambia to stakeholders, for consultation.
Draft Foreign Currency Regulations
On 20th June 2024, the Bank of Zambia began a consultation process regarding the draft foreign currency regulations through the Public Private Dialogue Forum. Once feedback is received from stakeholders, the Bank of Zambia will then circulate the finalised draft regulations. Therefore, it is important to first allow this consultative process to conclude.
Broad goals of the proposed currency regulations:
a) To enforce existing laws and strengthen the implementation of monetary policy, which works better by influencing the quoting and pricing of domestic transactions in Zambian Kwacha; and,
b) Dollarisation could be detrimental to financial stability as it gives rise to mismatches in the foreign currency assets and liabilities of financial institutions when there is a steep movement in the exchange rate. The draft foreign currency regulations are therefore also aimed at enhancing financial sector stability.
The proposed regulations are not stand alone but are part of the broader policy measures that the Government has implemented to reform the economy. These measures have included financial sector reforms such as the electronic balance of payments and the export tracking framework.
Phasing Out of Cheques:
Regarding the phasing out of Cheques, let me begin by indicating that the fake notice currently circulating on social media platforms titled “Public Notice on Phasing out of cheques” WAS NOT issued by the Bank of Zambia. The Bank of Zambia is currently discussing the possibility of phasing out Cheques and consultations are underway. The Bank will accordingly issue a public statement once these engagements are concluded, and a decision made.
Broadly, phasing out cheques is one of the key initiatives being pursued under the National Payment System Vision and Strategy for 2023-2027. This is mainly on account of the significant decline in the usage of cheques over the past decade.
I reiterate that the Bank of Zambia has commenced stakeholder consultations to allow for wider discussion and feedback. This will help in creating the necessary awareness on the intention of this regulation and to ensure that these regulations work for all.
The public and stakeholders are assured that discontinuation of the usage of cheques as payment instruments will be done in a consultative, coordinated, and phased manner. The plan is for a more gradual approach with a timeframe of at least eighteen (18) months.
Madam Speaker, I Thank You.
We thank you