This report provides an assessment of the current state of development of financial safety nets and bank resolution frameworks in eight countries in southern Africa (Botswana, Eswatini [formerly Swaziland], Lesotho, Mozambique, Namibia, South Africa, Zambia, and Zimbabwe).
... See More + It has been prepared to inform ongoing and planned technical assistance projects in the southern Africa region and to provide a basis for engagement with the authorities in each of the countries covered by the study. This summary draws from more detailed material contained in a comprehensive study.
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This report provides an assessment of the current state of development of financial safety nets and bank resolution frameworks in eight countries in southern Africa (Botswana, Eswatini [formerly Swaziland], Lesotho, Mozambique, Namibia, South Africa, Zambia, and Zimbabwe).
... See More + It has been prepared to inform ongoing and planned technical assistance projects in the southern Africa region and to provide a basis for engagement with the authorities in each of the countries covered by the study. This summary draws from more detailed material contained in a comprehensive study.
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The Financial Sector Advisory Center (FinSAC), in operation since 2011, is part of the World Bank's regional Europe and Central Asia (ECA) unit of the Finance, Competitiveness, and Innovation (FCI) Global Practice.
... See More + FinSAC supports client countries in the ECA region to build more resilient and more stable financial sectors. A dedicated Vienna-based technical unit of the World Bank, FinSAC delivers implementation-oriented technical advice to client countries with funding fromAustria’s Federal Ministry of Finance. It assists countries in the region in dealing with some of the legacy issues of the global financial crisis, including the resolution of non-performing loans (NPL) and fragmented crisis management frameworks, and in implementing new international and regional regulatory and supervisory initiatives. These activities have a special relevance for the ECA region, which despite recent improvements stands out as the World Bank region worst affected by the financial crisis. FinSAC's work is organized around three thematic pillars: pillar 1 - macroprudential supervision and crisis management, pillar 2 - microprudential oversight and NPL management, and pillar 3 - bank resolution. Bilateral technical assistance engagements with counterparts in eligible countries are the cornerstone of FinSAC's activities, but it also organizes technical workshops, conferences, and seminars and undertakes research projects. A distinguishing feature is the availability of in-house technical experts who take the lead in delivering FinSAC's work program. The FinSAC team bring applicable knowledge and hands-on experience of the stability themes that they cover. Their skills are critical to FinSAC's capacity to provide policy advice that is appropriately tailored to client countries' needs. Their proximity to beneficiaries of FinSAC support allows for frequent short and cost-effective missions, giving central banks and regulators in client countries easy access to technical expertise.
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Traditionally, global standard-setting bodies (SSBs) and the country-level policy makers who seek to follow their direction have focused on financial stability, the integrity of financial systems, and the protection of financial consumers.
... See More + While some still see financial inclusion as a trade-off against these other objectives, over the duration of CGAP V there has been a growing understanding that synergies among financial Inclusion, Stability, Integrity and Protection (I-SIP) are also achievable.During CGAP V, the Global Policy Architecture (GPA) Initiative aimed to increase understanding of the interdependence of the I-SIP objectives and to mainstream financial inclusion in the work of the relevant SSBs, informed by experience from emerging market and developing economies (EMDEs). This called for helping policy makers—especially at the country level—to optimize the linkages among I-SIP objectives, maximizing synergies and minimizing trade-offs. It also called for a recognition that the digital finance revolution, which is reaching scale in increasing numbers of countries, is changing the nature and often the level of the risks with which policy makers must contend.
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The objective of the Financial Inclusion and Stability Project for Mozambique is to increase financial inclusion among underserved groups and MSMEs, while strengthening the overall financial safety net.
... See More + There are three components to the project, the first component being increasing usage of transaction accounts and access to finance for MSMEs. The objective of this component is to support increased usage of transaction accounts (bank or mobile money accounts) in remote and underserved areas. This component includes three subcomponents: digitization of government payments, promoting financial education and awareness, and enabling environment for access to credit for MSMEs. The second component is the strengthening financial safety net. The objective of this component is to increase the capacity of the deposit insurance scheme to protect individual small depositors and contribute to overall financial stability. This component includes two subcomponents: deposit insurance capitalization and upgrading supervisory technology and deepening capital markets. Finally, the third component is the project management, monitoring and evaluation. Drawing from the experience of the FSTAP, the project will establish a dedicated PIU within the Ministry of Economy and Finance comprised of individuals that can work full time on the project’s implementation. This will entail a project coordinator, a procurement officer, a financial management officer, and a monitoring and evaluation officer. To ensure proper coordination and supervision, a Project Steering Committee (PSC) will be established, composed of the principle stakeholders. The PSC will be chaired by MEF and comprised of representatives of BOM, DGF, Ministry of Industry and Commerce, Ministry of Education, INAS, and ISSM. Section four expands on implementation arrangements.
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The development objective of the Financial Sector Support Project (FSSP) for Kenya is to strengthen the legal, regulatory, and institutional environment for improved financial stability, access to, and provision of, affordable and long-term financing.
... See More + The restructuring reflects changes in the financial sector priorities and the authorities’ strategy for the use of FSSP funds and revisions to the results framework to better align project indicators and targets with the project development objective (PDO).
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Ratings for the Financial Sector Modernization and Information Management System Project for Vietnam were as follows: outcome and Bank performance was moderately satisfactory, and monitoring and evaluation (M and E) quality was modest.
... See More + Some lessons learned included: the strong client ownership and capacity, and the World Bank’s strong supervision support are crucial for complex information technology (IT) - based projects. The project design must be based on solid analysis of institutional, operational, and technological needs and feasible options. It is important to remain flexible in the rapidly changing IT environment. This project has demonstrated that complex IT projects may take longer than expected time to complete since they require significant consensus-building among stakeholders before the finalization of the IT-systems design. A good communication on the project benefits throughout the project implementation is essential, as is the appropriate support to the end-users once the systems go live.
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Implementation Completion and Results Report ICR4417 NOV 01, 2018
Theory suggests that the effect of banking market concentration on financial stability is mediated by several competing variables. Using a sample of 68 countries from 1997 to 2015, this paper proposes a unified empirical framework to test for the simultaneous presence and impact of the mediators through which concentration is expected to impact financial stability.
... See More + The results indicate that the magnitude and net effect of the mediators depend upon the level of concentration. At lower levels of concentration, increasing concentration improves banking system stability via profitability. At higher levels of concentration, increasing concentration makes the banking system more fragile because of the cost of credit, diversification and the ease of monitoring. For intermediate levels, concentration has no significant effect on financial stability, as the competing moderators cancel each other out. The results suggest that an intermediate level of concentration may be optimal for welfare.
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Policy Research Working Paper WPS8615 OCT 16, 2018
Deposit insurance is a widely adopted policy to promote financial stability in the banking sector. Deposit insurance helps ensure depositors' confidence in the financial system and prevents contagious bank runs, but it also comes with an unintended consequence of encouraging banks to take on excessive risk.
... See More + This paper reviews the economic costs and benefits of deposit insurance and highlights the importance of institutions and specific design features for how well deposit insurance schemes work in practice.
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Policy Research Working Paper WPS8589 SEP 19, 2018
This issue of Indonesia Daily Economic Update for September 12, 2018 contains the following economic highlights: (i) Bank Indonesia (BI) reported that the retail sales index went down from 216.0 in July to 207.8 in August.
... See More + However, the index grew by 2.8 percent yoy; (ii) The Indonesia Deposit Insurance Corporation (LPS) has decided to raise its guaranteed interest rates for Rupiah deposits in commercial banks by 25 bps to 6.5 percent, while raising the rates for microcredit banks and foreign exchange deposits by 50 bps to 9.0 percent and 2.0 percent, respectively; and (iii) The government is to issue foreign-denominated bonds in early 2019.
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