Financial outlook: implications of capital market deepening

Abstract

The 1989 Budget has introduced several new measures to further develop the financial system. This paper outlines the implications of capital market deepening on the financial system. The development of the capital market is incumbent upon a strong financial system. Unless savers and investors continue to have strong confidence in the stability of the financial system the ability of the Central Bank to maintain financial order, further financial developments in the country will be hampered. The introduction of new instruments, systems and procedures as a result of financial deepening will in turn affect the functioning of the financial system, in the determination of interest rates and mobilisation of savings.