Abstract
The read seeks to give a critique regarding the theoretical framework of economic governance as it relates to financial sector in Zimbabwe and identify institutions within the financial sector and explain their roles. It also seeks to unpack the concepts related to banking or the financial sector, with critical emphasis on the role of central banking from a policy and developmental perspective. Outline regarding the economic the past regarding the development regarding the financial sector in Zimbabwe and the regulatory framework governing the financial sector shall also be given. To capture the community's view and skills development regarding the financial sector within the period 2003 to 2009, recording of community voices was done, with primary emphasis on the views around the inclusion or exclusion, well-known notions of monetary policy and banking, and impact (perceived or real) of these on people's corporate conditions. Finally the read seeks to equip the poor and grassroots communities and the working classes, to engage meaningfully in discussions on the role of monetary institutions as component of an ongoing engagement on economic and public policy advocacy.
Introduction
There was increased call for a greater attention to development of financial processes in many countries all over the world. The financial sector is well known for its purpose of allocating savings, from surplus units to deficit units. One can have plenty of resources (cash or wealth), but is not prepared to use or consume within the current period but later within the future. And on the other paw an economic agent shall need funds for a critical purpose currently but due to some reasons have no adequate funds. So financial institutions help in collecting funds and match the current wants of some investors and hence creating economic development by avoiding idle funds. Some researchers (Herring and Santomero (1991)), argue that the direct impact of financial institutions on the real economy is minor, while the indirect impact of financial markets and institutions on economic performance is extraordinarily important. A financial system that is efficient and well is a vital and compulsory component for faster economic development. If a financial system is efficient, then it should display profitability improvements, increased funds intermediation, better prices for financial products and quality services for consumers. If the financial system is below tight regulation, financial markets should not be can function efficiently and the use of resources should not give desired outcomes. It should also be noted that reforms in other sectors have fewer impact on the overall economic development if the financial sector is below control, Edirisuriya (2007). As component regarding the economic growth strategy, many economies have aimed at improving their financial sector. Ghana structured its financial reforms in 3 phases, FINSAP two and FINSAP 3 (Financial Sector Adjustment Program) and the reform for Non- bank financial institutions credit, Gordon (2008). An assessment regarding the impact of this policy on savings, investment and the growth of income (GDP) within the Ghanaian economy was undertaken by Gordon (2008) and positive impact regarding the financial sector on the economy. Previously, Ghana operated a tightly regulated financial system and the impacts of these policies on economic development were located to be dismal. The place turned to Worldwide Monetary Fund (IMF) for assistance to reshape the macroeconomic structure, and one regarding the policy packages was to reform the economy's financial system. Financial liberalization thereafter affected positively the interest rate, savings, investment and GDP in Ghana. Sri Lanka also went ahead with its financial sector reforms about 3 decades ago, Piyadasa (2007). The reforms were also spearheaded by the IMF and World Bank, and they encouraged the opening up of financial markets for foreign and domestic competition and to encourage efficient functioning of financial market with fewer government interferences. Primary economic factors to look at include; the inflation level, rate of economic growth, unemployment levels, balance of payments and the exchange rate (Business Studies Online). A well functioning financial sector is can influence positively on the economic factors. High grades of inflation hold a many problems; people try to keep money and so shall provide less, high prices leading to people becoming worse off, costs shall increase and exports shall decrease hence exporting businesses greatly affected leading to unemployment. The Zimbabwean nation has experienced such problems and not ever wish to return to such time soon, savings have been eroded. Capital goods production is one regarding the greatest ways an economy achieves an extended lasting sustainable and stable economy. Financial services stimulate savings, investment and growth of GDP and for that reason economic growth by increasing the rate of capital accumulation and by improving the efficiency with which the economies use that capital, Gordon (2008). Well functioning banks spur on technological innovation by identifying and funding those entrepreneurs together with the greatest chances of successfully implementing innovative products and production process. The studies seeks to explore the financial sector in Zimbabwe, its impact on the economy and how the Central bank policies affect the operations and efficiency grades within the economy. It dates return during the crisis period (2003-2009). The crisis originated from Central bank policies adopted during and prior to the crisis. The Reserve Bank of Zimbabwe (RBZ) adopted an uneconomic formula to manage the position of money supply within the economy, and hence it failed to manage the economy. The RBZ failed to manage its independency status from the political family and hence supported uneconomic projects by printing excess money. The relationship between the RBZ and other financial institutions during the crisis period about insurance y what the RBZ called ‘Financial Indiscipline' in 2008. It is reported that during the final quarter of 2008 the financial sector had fallen return into territories of indiscipline and general malaise,resulting within the contamination of ethics in such institutions as the Zimbabwe Stock Exchange (ZSE) which invented the deadly phenomena of "burning money". Indiscipline in banking and stock markets is precisely what has largely been responsible for the global economic crisis particularly within the USA, RBZ Monetary Policy (2009). The RBZ Governor, was quoted in his Monetary Policy Statement, blaming the Financial sector and warning it against indiscipline within the market;
"As true as the sun rises and sets each day, the "miracle" of "burning" money should not be sustained by men and women born of flesh and pretending to have the supernatural powers of our God Jesus Christ. It was soon to back-fire and consume those that were stroking the fires within first place."
The Governor argues that it is the activities regarding the Financial sector that transforms to Central bank to be blamed, hence he has warned it multiple times, and has place measures to manage their activities. The Governor specified that new measures constitute a war against idleness as without some gainful activity, citing roadport and world-bank sextillionaires destined for the starvation market. Hence from this evidence the RBZ has most corporate and economic influence on individuals and companies, and it is the impact of its influence that we seek to analyse. It was pointed out that lone and collective actions regarding the past have not taken the economy anywhere, particularly within the parts of advancing collective socio-economic programmes, hence RBZ initiated change of behavior, even from the politicians and diplomats. The RBZ set up a 5-year framework to book the financial sector activities such that no shift from core banking business to speculative transactions. Financial Institutions in Zimbabwe
Zimbabwe's financial sector is relatively sophisticated and consists regarding the Reserve Bank, discount houses, commercial banks, merchant banks, finance houses, building societies, the Post Office Savings Bank, many insurance businesses and pension funds and a stock exchange. As at 25 January 2009 Zimbabwe has 15 commercial banks and 5 building societies below the supervision regarding the Reserve Bank of Zimbabwe. Commercial banks have been and are one regarding the greatest important contributors of private sector credit and that is why highly influential over most parts of economic activity. However, currently they can be facing financial constraints, as the Reserve bank cannot perform its function like a lender of final resort due to phasing out regarding the Zimbabwean regional currency. Commercial banks have in fact changed their loan structure, they can be now lending brief term loans, just for their survival and to sure credible analysed economic agents. Brief term loans are very costly as the interest is very high. They can not be used for sustainable investment, as capital investment wants to be matched with long term loans. Hence, different organisations are financially constrained, with multiple Tiny and Moderate Enterprises (SMEs) shifting their operations, and the shift is not real for the growth regarding the economy as it creates gaps within the economy. The banking sector has since facing problems; they have retrenched their workforce, as they have shut some operations due to crisis. The performance regarding the financial sector currently shall be explained by the return on investment registered through the Zimbabwe Stock Exchange (ZSE) market. Very little businesses registered on the stock exchange are creating huge returns. The volatility regarding the Mining Index and Non-residential Index is very low, indicating that it is not worth to invest in shares, as the return is almost to nothing. Also individuals are not can generate savings to invest within the stock market, as many are earning very little salaries, distant below the Poverty Datum Line. Workers are withdrawing all of their salaries in their bank accounts, leaving nothing for the banks to do their own investments. Banks are surviving on the bank charges and minimum balances for investing, creating it hard to generate money for lending to needy investors. Currently the economy is comprised of deficit agents who need to be rescued within the financial drought and very little surplus agents. General Functions of Central Banking
A central bank is known as the apex regarding the banking structure. A central bank is distinguished from a normal commercial bank due to the fact that it has a monopoly on creating the currency of that nation, that is loaned to government within the shape of legal tender. Central banks around the earth have more or fewer the similar to roles they perform for the benefit regarding the economy, what differs is their efficiency and scale of operation. Most importantly is the position of central bank independency to political influence. Most regarding the wealthy countries this day have independent central banks, that is, ones which operate below rules drafted to prevent political interference. Examples with the European Central Bank and the Federal Reserve System within the United States. In a summary the general functions shall be listed as follows;
1. Supervision regarding the entire banking system within the economy. (2) Should act as the government advisor on monetary policy. (3) Issue of banknotes and coins (printing money). (4) Acting as banker to other banks. (5) Acting as banker to government. (6) Raising money for the government. (7) Controlling the nation's currency reserves. (8) Acting as "lender of final resort." (9) Liaising with worldwide bodies. Subsequently it has to be noted that on each and every function, each country's Central bank has its own position of efficiency depending on the resources, rules governing operations, flexibility and many other factors. The Central bank of Zimbabwe commonly known as the Reserve bank of Zimbabwe (RBZ) also performs some regarding the above functions and has its own efficiency grades and hence affecting the transition regarding the economy's growth pattern. Traditional functions and Developmental Functions of Central Banks
It shall also be worthy to explain the multiple functions regarding the Central Banks in terms of origin and development perspective. For every Central bank, there exists simple functions that it has to undertake for the public's benefit and also the economy in general. It is taken as the leader who should operate by example and should spearhead the path of which agents are to take. Hence the Central Bank has most Economic and Corporate influence. Traditional Functions
Traditional functions refers to obvious roles that the bank should be carrying. If the Central bank is not efficient in these roles, it shall be quickly criticised by every economic agent. Inefficiency is quickly detected. The functions shall be provided as follows;
1) Public confidentiality. (2) Uniformity in money issued. (3) Easiness in credit manage (4) Manage in price of money. (5) Economy (6) Elasticity (7) Stability (8) Easiness in monitoring and controlling If the functions are well undertaken by the Central Bank, the economy is spoke about to be stable and economic agents should be earning normal business profits, workers earning decent salaries, goods well priced and corporate status acceptable. Developmental functions
Developmental functions refers to those functions that are strategic in nature and helps the overall economy to be competitive to other nations. They can be associated with different economic policies that book the entire nation on good business practices that enhance efficiency. The functions involves publication of economic data that shall be used by different economic agents for their own analysis and economic forecasts, so as to determine the greatest ways of procedure that is profitable and sustainable. The functions shall be listed as follows;
1) Economic development (2) Development of banking system (3) Contribution to development of financial institution (4) Publication of economic data. (5) Supporting of loan to poor sector (Empowerment) (6) Establishing the commercial banks in joint ventures (7) Development finance If the Central Bank is not correctly partaking the functions, political influence returns into play, due to the fact that they determine the efficiency regarding the ruling party. Also the efficient grades regarding the Central bank towards the developmental functions should be affected by the position of independency it has from the political world. The Central Bank of Zimbabwe (RBZ) and its General Functions: Current Analysis
The efficiency and smooth running of many economies depends on the activities and functions of their Central banks, and from this phenomenon shall make it compulsory to analyse each simple function carried out by the Reserve bank of Zimbabwe. The Central Bank is supposed to issue banknotes and coins
This function refers to issue of printing cardboard money and is not as simple as it may seem. Only the central bank has the right to issue bank notes and coins within the economy and no one else. Printing of cardboard money and issuing of coins is highly depended on an economic formula of which if the formula is bypassed, it shall change the path of economic development regarding the nation and hence causes inflationary effects. During the 2003-2009 period, the RBZ abuses its right of printing and issuing notes and coins and end up printing excess money and hence inflation increases exponential and the economy was unstable. It uses the wrong formula, of issuing the notes and coins. A correct economic formula matches the position of reserves to no. of paper/ discretionary money within the economy. Due to abuse regarding the role, the Zimbabwean dollar, lost its credibility within the economy, and turned into unwanted currency. Economic agents preferred stable currencies than the regional currency, enforcement of laws was done to make sure that continuous existence regarding the regional currencies but should not work. Penalties were imposed, but still should not work as the RBZ continuously printed more money to finance government expenditure. ‘Good' money replaced ‘bad' money within the Zimbabwean economy. Until such a time when the regional currency was completely rejected for any transaction, the authorities were forced to authorise the use of other currencies for business transactions (Multicurrency regime). Most payment these days not ever involve cash but cheques, standing order, direct debit, credit cards and so on, subsequently cash is important as bank's cash holdings are a constraint on creation of credit. As of now the RBZ is no detailed can perform the function of issuing notes and coins, due to the fact that the Zimbabwe has no currency right now. The economy is creating use of Southern African rands and the United States dollar for business transactions. The no. of forex within the economy depends on the strength of attraction from the services the economy is rending to other nations, donors and credit from worldwide organisations. The Central Bank should act as "lender of final resort."
For the economy to be well function, organisations should be working at full capacity and with no constraints. One primary constraints organisations face is the financial constraints. Businesses usually obtain loans from banks and financial institutions, ranging from brief term loans to long term loans (mortgages). Subsequently there is a time when banks are not can meet demand and hence the Central bank has to be the lender of final resort. The government treasury bill and bond markets are covered by the central bank. It can release in many types, there exists 30 day treasury bills, 90 day treasury bills and 180 days treasury bills. One good thing together with the Central bank loans is that they can be cheaper as compared to commercial bank loans. The RBZ currently is not can act as the lender of final resort, there is no production of funds around its activities and neither can it print as there is no currency. The RBZ has lost its credibility, together with the economy, other nations and development banks. In fact, it is struggling to pay its own debts, it has accrued during crisis period. Therefore, the bank cannot extend its hands to others rather is waiting for such favours. Government advisor on monetary policy
Because, the Zimbabwean nation currently has no regional currency of its own, the RBZ cannot fully advise the government on the central issue on monetary policy. The role implies that the RBZ should manage the position of money supply within the economy to let smooth business operations, and stay away from inflationary effects. However, for the monetary policy statement is still issued within the economy, only to explain the happenings within the economy as distant as interest rates are concerned. The monetary policy is no detailed the path map which economic agents rely on, and it has lost its traditional importance. Supervision regarding the entire banking system within the economy
The Central bank should be at the top of all other banks and hence regulating and monitoring the activities regarding the sector. The RBZ was in charge during the period, it was monitoring the minimum capital requirement levels. During the period some banks which were not performing regarding to compulsory position and not in line together with the set regulatory framework were forced to close and some merged, for example the Time Bank was closed, Intermarket Bank was swallowed by ZB Bank family. Corporate Roles regarding the Central Bank
During the crisis period the RBZ engages itself in different corporate programs, for example empowering citizens through the Mechanisation Programme. This was of best importance fro some individuals, consequently not all people were involved and the method it was done through excess printing of money. The program raises corporate RBZ from the perspective regarding the awarded population n the Agricultural sector. The RBZ also engaged itself within the housing financing schemes, giving food vouchers to poor and sourcing cars and perks for court judges. However, there was debate around the manner in which the bank has traversed its monetary policy duties to usurp the fiscal and other roles. The manner in which this institution has sought to manage the mediated public sphere through mostly unorthodox means is spoke about to have fuelled the crisis and has created corporate inequality as their policies were in quasi format and not can close the total population but rather the selected few. Central Bank and Financial Institutions
The Central Bank is at the top of all financial institutions and of course it is the regulator of all the activities within the financial sector. However, the Central bank receives proposals from the different institutions on the activities that may need to be undertaken to improve the sector and profitability regarding the institutions. Apart from the Central bank's influential role, institutions have their own component to take. Regarding to Posen (2006), central bankers cannot count on banking supervisors or budgetary officials to stick to straight and narrow, even if one assumes that a politically independent central bank shall pursue largely the right policy. Japan within the 1990s is a particularly salient illustration regarding the dangers of lack of coordination between financial and monetary authorities. Arguably, there was a three-way play of lamb between the Bank of Japan, the Ministry of Finance, and the new Financial Services Agency that paralyzed policy for the 2nd 1/2 regarding the 1990s. Central banks are not that powerful that financial institutions shall be completely guided by unfavourable policies regarding the Central banks due to the fact that of imperfect details and the velocity at which researches are created by central banks and lone institutions. Researches by lone institutions are more efficient and faster than those by Central bank due to the fact that Central banks broaden their studies to close the whole economy. So financial institutions should convince and prove their formulas to central bank for approval and not only wait for policies by the Central banks. Innovation is the only method in which the financial sector relies on to reduce transaction costs. Compression applied by worldwide organizations for example the IMF and the World Bank and the introduction of new technologies have forced authorities to relax controls creating the financial sector more competitive and efficient in many countries (e.g Ghana and Sri Lanka) whose financial reforms have contributed to economic growth. That is why for Zimbabwe financial institutions should continue to engage in cutting edge designs invention despite tight policies from Central bank. Public awareness should also be done to increase the many participants within the sector. Lack of financial literacy between the people and lack of clean directions from the government to financial market affect progressing efficiencies further, Piyadasa (2007). Effective communication shall be an important and powerful component regarding the central bank's toolkit since it has the ability to move financial markets, to enhance the predictability of monetary policy decisions, and potentially to help achieve central banks' macroeconomic objectives, Blinder et al (2008). This means that if details is slow or incomplete between the Central bank and the whole financial system problems arise creating it difficult to achieve economic goals. The inability to meet economic targets shall affect the society like an entire most economically and socially. A little decades ago, conventional wisdom in central banking circles held that monetary policymakers should speak as little as possible, and speak it cryptically, Blinder (2008). Communication policy has risen in stature from a nuisance to a key instrument within the central banker's toolkit. Like a result, many central banks have grow to remarkably more transparent and have started placing many greater mass on their communications. The Reserve Bank of Zimbabwe, was communicating through presentation of monetary policy, magazines and newsletters and magazines between other methods in an effort to release details to financial processes on its policies. However, it is the quality regarding the details that also matters and implications associated. Official statements, reports, and periods appear to have the clearest and most consistent empirical effects on financial markets. The evidence on the impact of speeches is more mixed. But it, too, is mainly supportive regarding the system that central bank communication "creates news." Communication shall be divided into "short-run" central bank communication and "long-run" central bank communication depending on the scope and time horizon objectives. it is widely accepted that the ability of a central bank to affect the economy depends critically on its ability to influence market expectations related to the future path of overnight interest rates, and not merely on their current level. The Reserve Bank of Zimbabwe indicated specifically the guidelines to be followed by the banking sector, of which violation was financial indiscipline. This was to make sure that uniformity within the sector, so as to manage the crisis. It also shows that the banking sector is well controlled and monitored by the RBZ. Diagram.
Source: Reserve Bank of Zimbabwe, Monetary Policy Statement, January 2009 Whilst it is a good system that the Central bank controls and monitors the development within the financial/banking sector, it shall also be worth for it to adjust and revise its rules and regulations within the earliest time that allows flexibility and innovation within the sector. The RBZ policies are in location for an extended time, such strategies are not suitable for a developing and high innovative economy like Zimbabwe. The Zimbabwean financial/banking sector is trying to race with other nations to pamphlet a competitive position within the worldwide market. With increasing globalisation there is increased linkages between nations as there exists now increased numbers of travellers, the banking sector should be faced by most exogenous and endogenous policy guides. Regulatory Framework for Non-bank Financial Institutions
The relationship between the RBZ and Non-Bank financial institutions is one sided as the former is not satisfied by the freedom they enjoy. Regarding to RBZ there is an absence of a well defined and comprehensive regulatory prudential supervision framework for the Zimbabwe Stock Exchange, Stock Brokers, Insurance Businesses and Pension Funds and this has significantly compromised financial stability. Illegal transactions, indiscipline and reckless disregard of rules and regulations have been detected within the sector. There exists no prescribed educational credentials for registration of stockbrokers. During the period below read most pension funds and insurance businesses were not complying together with the minimum prescribed asset requirements of 35% and 30%, respectively. Hence the RBZ was calling for compliance. The minimum capital requirement for different institutions were set as follows;
Diagram.
Source: Reserve Bank of Zimbabwe, Monetary Policy Statement, January 2009 While it was good to have these minimum capital requirements, many businesses failed to comply and this automatically indicate that the grades set were barely too high for the period. Any reforms based on such set targets are deemed inappropriate and likely not ensuring stability. The Central bank has to consult different organisations to reach an economic minimum capital requirements, this ensures the smooth operations between institutions. The RBZ should welcome suggestions from the public and different economic agents apart from its studies and monitoring management tool kit. Recorded Community Voices Capturing experiences together with the Financial/Banking Sector during 2003-2009 in Zimbabwe:
"From long, I have developed trust together with the banks, and every extra money I channelled it into my CBZ account. And there it was kept safely, and for me it was a good spending discipline as I was not always in village to withdraw cash. I only went there, subsequent to my money has accumulated and need to purchase a good asset with value. However, as time goes on, saving money should not bring development to me as the quantity remains insignificant over time, within the interest which was almost nothing. Late, as years progress, cues were now seen at banks, it became harder and harder to withdraw cash, then it became harder to deposit cash as the return was zero. As inflation increases, public cues increases during month end, so as to withdraw cash quickly prior to inflation does its job of price reduction."
"The crisis created me poorer, all my money within the bank which I saved for years was reduced to nothing."
"Companies were now paying people twice a month, money has lost its value."
"It was profitable to invest within the shares, as the cost was shooting day by day, but the economy was not growing."
"The banks, became the source of corruption. To withdraw money, you have knowledge of to have knowledge of somebody or you cue for the whole day."
"During the crisis period my bank should not meet the minimum capital requirement set by the RBZ and hence it merged, leading to change in name."
"I survived through hedging, as keeping money within the bank proved to be disinvestment. As soon as my pay is within the bank account, I withdraw the money and purchase foreign currency, which i shall ration through the month. Signs of danger within the economy should be slowly de detected until it becomes common knowledge to leave for forex to shop price regarding the money."
"It started with schools asking for top up fees every term. I thought schools are now robbing us, yet there was no increase within the services they offered to our children. Then, my money later proves not to be enough for me and my family but I hold a good job and status."
"Taking money from the banks was very hard, subsequently I used ATM card to purchase groceries in supermarkets and it was good then. Later, ATM cards were rejected by supermarkets and it was hard time now."
"Banks were now useless, barter trade was distant better to operate with."
"The returns on the ZSE were too high, and did not reflect development grades within the economy. But I wasn't tempted to sell my shares."
"Minimum withdrawals were place in place, and I decided to reveal many bank accounts with multiple banks, such that at the end regarding the day I shall have money to exchange with forex which was an improved shop of value."
Conclusion
The Zimbabwe financial sector, consequently it is currently underpinned by different constraints, it remains one regarding the greatest organised sectors within the economy, and strives to improve economic performance. The sector greatly wants the help from the government, implying that means the government should return up with policies that not ever interfere together with the innovations within the sector. The sector is always the pioneer in innovation and development. The Zimbabwe Stock Market is the 2nd greatest in Africa subsequent to the Johannesburg Stock Market, and this shows that constant help and development regarding the sector should be done to hold and improve our position. As component of development regarding the sector, derivative markets shall be reintroduced in Zimbabwe, as they improve society relationship and improve risk management for investors. Derivatives improve production through certainty of prices, and through the use of futures and contracts. As the banking sector is the leading sector in most financial systems, the reforms should be mainly directed towards the banking sector. Most of these reforms within the past were mainly advocated by the IMF and the World Bank. To improve the banking sector there exists some recommendations worth to be taken like of to make sure that efficiency and involve improving private sector participation within the financial sector, removal of restrictions on banking products for example interest rate and loans, exchange rate relaxation, opening up of financial markets for foreign and domestic competition and to encourage efficient functioning of financial market with fewer government interferences. If banks remain weaker, then they shall continue to depend on public support, Petra (2010). The studies located out that financial services stimulate savings, investment and growth of local income (GDP) and for that reason economic growth by increasing the rate of capital accumulation and by improving the efficiency with which the economies use that capital. Schumpeter (1912) contends that well- functioning banks spur on technological innovation by identifying and funding those entrepreneurs together with the greatest chances of successfully implementing innovative products and production process. Foreign banks should be allowed to compete with state owned and private sector financial institutions in varying degrees. Financial reforms should mainly be directed towards relaxing the regulatory measures and reducing state's grip on the system. It should be noted that developed markets are with no problems can adjust to new reforms whilst it is not so easy in emerging market countries. There is a possibility that some temporary economic destabilizations shall occur at the beginning of sure reforms. Read on seven countries conducted by the IMF to examine linkages between financial sector reforms and financial crisis has identified a many destabilization factors (Sundararajan and Balino, 1991). Hence developing nations should not quickly reverse a policy when destabilization occurs due to the fact that policy makers lose credibility yet their policy should be sustainable in future. Higher position of corporate rigidities is one regarding the dominant factors significantly affecting the financial markets and this slows below the benefit of financial reforms. Poorly drafted or poorly executed communications clearly can do more harm than good; and it is not obvious that a central bank is always better off by saying more. In practice, central banks do limit their communications. In most cases, internal deliberations are kept secret. Only a little central banks project the future path of their policy rate. Communication is not pre-commitment, that is communication should not be confused to commitment, an reveal announcement requirement should impede timely and appropriate adjustments to policy. Central bank communication shall also be a two-way street: It should have most a transmitter and a receiver, and neither should be the source of uncertainty or confusion. Moreover, on the receiving end, the similar to message may be interpreted differently by different listeners who shall have different expectations or trust in different models. In conclusion, policies to improve the financial sector should be socially acceptable and socially related. There should be a drafted method that links the Central Bank policies and the public view, such that any tough disparity should be justified. For every policy, target population should be seen benefiting from the policy, due to the fact that it was argued that, different economic agents are benefiting higher than the defined target. As it has to been noticed by different individuals' testimonies, the period in which the financial sector is in disorder sends people a very hard time due to the fact that of its direct impact to economy. Hence it is advised that the authorities should creation policies that are in line together with the financial sector development and hence it is socially acceptable. Economic development is directly connected to financial development, consequently some proposed a 3 method causal effect regarding the two. Zimbabwe's financial /banking sector contributes to position of economic growth, hence should receive adequate support.
References
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Reserve Bank of Zimbabwe, Monetary Policy Statement, January 2009
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