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Ref no: 59/2014
 

Today, the South African Reserve Bank hosted the sixth meeting of the Financial Stability Board (FSB) Regional Consultative Group (RCG) for Sub-Saharan Africa in Cape Town, South Africa.

At the meeting, members of the FSB RCG for Sub-Saharan Africa began by reviewing the FSB’s work plan, including the completion of policy reforms in four priority areas. These are: building resilient financial institutions; ending too-big-to-fail; transforming shadow banking; and making derivatives markets safer. The Group then discussed vulnerabilities in the global financial system, regional financial stability issues and possible policy responses. In this context, they considered uncertainties in the global growth outlook, the unwinding of accommodative monetary policies in advanced economies and their impact on Sub-Saharan Africa.

Members stressed the importance of financial inclusion and discussed how to align its objectives with those of financial stability and anti-money laundering measures. Limited access to financial services contributes to the use of informal channels, which are vulnerable to illicit cross-border flows. The Financial Action Task Force has stated that financial exclusion represents a real risk to achieving effective implementation of its Recommendations on anti-money laundering/countering the financing of terrorism.

Taking lessons from the global financial crisis, members discussed how to effectively deal with weak and problem banks. The Group reviewed the Basel Committee on Banking Supervision’s consultative paper on the issue 1 and discussed principles for dealing with weak banks, including the early identification of risks and the need for early intervention.

Finally, members discussed how banks should measure, aggregate and control their exposures to single counterparties or groups of connected counterparties across their books and operations. Weaknesses in this area have led to bank failures in the past and differences currently exist in prudential norms across jurisdictions. Members agreed that having consistent approaches and regulatory limits with respect to large exposures will contribute to stability of the financial system. 2

The FSB RCG for Sub-Saharan Africa is co-chaired by Lesetja Kganyago, Deputy Governor, South African Reserve Bank and Rundheersing Bheenick, Governor, Bank of Mauritius. Membership includes financial authorities from Angola, Botswana, Ghana, Kenya, Mauritius, Namibia, Nigeria, South Africa and Tanzania, as well as the Central Bank of West African States (BCEAO) based in Senegal. Permanent observers include the Committee of Central Bank Governors of the Southern African Development Community, and the East African Community. The list of members of the Regional Consultative Group for Sub-Saharan Africa is available at: http://www.financialstabilityboard.org/about/rcgssa.pdf.

Notes to editors

The FSB Charter stipulates that the FSB “should consult widely amongst its Members and with other stakeholders including private sector and non-member authorities. This process shall include engaging with the FSB Regional Consultative Groups and include an outreach to countries not included in the Regional Consultative Groups”. 3,4 At the Toronto Summit in June 2010, the G20 Leaders endorsed such a process by calling on the FSB “to expand upon and formalize its outreach activities beyond the membership of the G20 to reflect the global nature of our financial system”. 5

The FSB has been established to coordinate at the international level the work of national financial authorities and international standard setting bodies and to develop and promote the implementation of effective regulatory, supervisory and other financial sector policies in the interest of financial stability. It brings together national authorities responsible for financial stability in 24 countries and jurisdictions, international financial institutions, sector-specific international groupings of regulators and supervisors, and committees of central bank experts. Through its six regional consultative groups, the FSB is able to develop global financial policy initiatives through a more inclusive process.

The FSB is chaired by Mark Carney, Governor of the Bank of England. Its Secretariat is located in Basel, Switzerland, and hosted by the Bank for International Settlements.

  1. See http://www.bis.org/publ/bcbs285.pdf. [←]
  2. See http://www.bis.org/publ/bcbs283.pdf. [←]
  3. http://www.financialstabilityboard.org/publications/r_120809.pdf [←]
  4. The FSB regional consultative groups were established for the following regions: Americas, Asia, Commonwealth of Independent States, Europe, Middle East and North Africa, and Sub-Saharan Africa. [←]
  5. http://epe.lac-bac.gc.ca/100/206/301/faitc-aecic/g20/2013-08-14/summit-sommet/2010/toronto-declarationtoronto1b0e.html?lang=eng [←]