El Salvador Financial Sector Assessment Program : Safety Nets and Crisis Management Arrangements
In El Salvador, the banking safety net emergency liquidity assistance, resolution and deposit insurance- faces particular challenges given it operate in the context of official dollarization. The economy was officially dollarized in 2000 with the a...
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| Format: | Report |
| Language: | English en_US |
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Washington, DC
2017
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| Online Access: | http://documents.worldbank.org/curated/en/357511468023098128/El-Salvador-Safety-nets-and-crisis-management-arrangements-technical-note http://hdl.handle.net/10986/27766 |
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okr-10986-27766 |
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oai_dc |
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Digital Repository |
| institution_category |
Foreign Institution |
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Digital Repositories |
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World Bank Open Knowledge Repository |
| collection |
World Bank |
| language |
English en_US |
| topic |
ACCESSIBILITY ACCOUNTABILITY ACCOUNTING ADEQUATE LEGAL PROTECTION ARBITRAGE ASSET STRIPPING ASSOCIATION OF DEPOSIT INSURERS BALANCE SHEET BANK DEPOSIT BANK FAILURE BANK HOLDINGS BANK INSOLVENCY BANK OFFICIALS BANK RESOLUTION SCHEME BANK RESTRUCTURING BANKING CRISIS BANKING LAW BANKING SUPERVISION BANKS CAPITAL ADEQUACY CAPITAL ADEQUACY RATIO CAPITALIZATION CASH RESERVES CENTRAL BANK CENTRAL BANKS COLLATERAL COMMERCIAL BANK COMMERCIAL BANK HOLDINGS COMMERCIAL BANKS CONFLICT OF INTEREST COOPERATIVE BANK COOPERATIVE BANKS COOPERATIVES CORPORATE GOVERNANCE CORRECTIVE ACTION CORRECTIVE ACTIONS CREDIT LINES CREDIT MARKET CREDIT RISK CREDIT RISK MANAGEMENT CREDITORS CROSS-BORDER BANKING CURRENCY CURRENCY BOARD DEBTS DEPOSIT DEPOSIT GUARANTEE DEPOSIT INSURANCE DEPOSIT INSURANCE AGENCY DEPOSIT INSURANCE COVERAGE DEPOSIT INSURANCE FUND DEPOSIT INSURANCE FUNDS DEPOSIT INSURANCE PREMIUMS DEPOSIT INSURANCE SCHEME DEPOSIT INSURANCE SYSTEM DEPOSIT INSURANCE SYSTEMS DEPOSIT INSURER DEPOSIT INSURERS DEPOSIT WITHDRAWALS DEPOSITOR DEPOSITORS DISSOLUTION DIVIDEND DIVIDENDS EFFECTIVE DEPOSIT INSURANCE EMERGENCY LIQUIDITY ASSISTANCE EXCESS LIQUIDITY EXCLUSION EXTERNAL AUDITORS EXTERNALITIES FINANCIAL ASSETS FINANCIAL ASSISTANCE FINANCIAL CRISIS FINANCIAL DIFFICULTIES FINANCIAL FLOWS FINANCIAL INSTABILITY FINANCIAL INSTITUTION FINANCIAL INSTITUTIONS FINANCIAL INTEGRATION FINANCIAL MANAGEMENT FINANCIAL REFORM FINANCIAL SAFETY FINANCIAL SECTOR ASSESSMENT FINANCIAL STABILITY FINANCIAL SUPPORT FINANCIAL SYSTEM FINANCIAL SYSTEMS FORBEARANCE FOREIGN ASSETS FOREIGN BANKS FRAUD FUND MANAGEMENT FUNDING SOURCES GOVERNMENT BONDS GOVERNMENT DEPOSITS GOVERNMENT SECURITIES GROSS SETTLEMENT HOLDING HOLDING COMPANY HOLDINGS HOST COUNTRIES HUMAN RESOURCES ILLIQUID BANKS ILLIQUIDITY INDIRECT COSTS INDIVIDUAL BANK INDIVIDUAL BANKS INFORMATION SHARING INSTRUMENT INSUFFICIENT FUNDS INSURANCE AGENCY INSURANCE PREMIUM INSURED DEPOSITS INTEREST RATES INTERNATIONAL BANK INTERNATIONAL BANKS INTERNATIONAL FINANCIAL STATISTICS INTERNATIONAL RESERVES INTERNATIONAL STANDARDS INVESTMENT POLICIES INVESTMENT POLICY JUDICIAL REVIEW LARGE DEPOSIT LEGAL ASSISTANCE LEGAL FRAMEWORK LEGAL INSTRUMENTS LEGAL PROTECTION LEGAL REQUIREMENTS LEGAL TENDER LEGISLATION LENDER LENDER OF LAST RESORT LETTERS OF CREDIT LEVELS OF LIQUIDITY LIQUID ASSET LIQUID ASSETS LIQUID RESOURCES LIQUIDATION LIQUIDATION PROCESS LIQUIDITY ASSISTANCE LIQUIDITY MANAGEMENT LIQUIDITY NEEDS LIQUIDITY PROBLEMS LIQUIDITY REQUIREMENTS LIQUIDITY RISK LIQUIDITY RISKS LIQUIDITY SHOCK LIQUIDITY SHOCKS LIQUIDITY SHORTAGES LOAN LOCAL BANK LOCAL BANKS MALFEASANCE MANDATE MANDATES MARKET MECHANISMS MARKET RISK MARKET TRANSACTION MONETARY FUND MONEY SUPPLY MORAL HAZARD PARENT COMPANIES PAYMENT SYSTEM PENALTIES PENALTY PENSION PENSION FUNDS PORTFOLIOS PREPAYMENT PRIVATE FINANCIAL INSTITUTIONS PRIVATE FUNDS PROBLEM BANK PRUDENTIAL REQUIREMENTS PUBLIC FUNDS PUBLIC POLICY RECEIVER RECOVERY OF ASSETS RECOVERY RATE REGULATORY CONSTRAINTS REGULATORY FRAMEWORK REMEDY REPOS RESERVE RESERVE ACCOUNT RESERVE FUND RESERVE FUNDS RESERVE REQUIREMENTS RESOLUTION MECHANISM RESOLUTION MECHANISMS RESOURCE ALLOCATION RESTRUCTURING PROCESS RISK CHARACTERISTICS RISK MANAGEMENT RISK PERCEPTION SAFETY NET SAFETY NETS SETTLEMENT SHAREHOLDERS SMALL BANK SMALL BANKS SOLVENCY SOLVENCY PROBLEMS SOLVENT SOLVENT BANKS SOURCE OF FUNDS SUBSIDIARIES SUBSIDIARY SUPERVISORY AGENCIES SYSTEMIC CRISIS SYSTEMIC RISK SYSTEMIC STABILITY TECHNICAL SUPPORT TRANCHE TRANCHES TRANSACTION TRANSFER OF ASSETS TRANSFER OF LIABILITIES TRANSPARENCY TRUST FUND TRUSTEE |
| spellingShingle |
ACCESSIBILITY ACCOUNTABILITY ACCOUNTING ADEQUATE LEGAL PROTECTION ARBITRAGE ASSET STRIPPING ASSOCIATION OF DEPOSIT INSURERS BALANCE SHEET BANK DEPOSIT BANK FAILURE BANK HOLDINGS BANK INSOLVENCY BANK OFFICIALS BANK RESOLUTION SCHEME BANK RESTRUCTURING BANKING CRISIS BANKING LAW BANKING SUPERVISION BANKS CAPITAL ADEQUACY CAPITAL ADEQUACY RATIO CAPITALIZATION CASH RESERVES CENTRAL BANK CENTRAL BANKS COLLATERAL COMMERCIAL BANK COMMERCIAL BANK HOLDINGS COMMERCIAL BANKS CONFLICT OF INTEREST COOPERATIVE BANK COOPERATIVE BANKS COOPERATIVES CORPORATE GOVERNANCE CORRECTIVE ACTION CORRECTIVE ACTIONS CREDIT LINES CREDIT MARKET CREDIT RISK CREDIT RISK MANAGEMENT CREDITORS CROSS-BORDER BANKING CURRENCY CURRENCY BOARD DEBTS DEPOSIT DEPOSIT GUARANTEE DEPOSIT INSURANCE DEPOSIT INSURANCE AGENCY DEPOSIT INSURANCE COVERAGE DEPOSIT INSURANCE FUND DEPOSIT INSURANCE FUNDS DEPOSIT INSURANCE PREMIUMS DEPOSIT INSURANCE SCHEME DEPOSIT INSURANCE SYSTEM DEPOSIT INSURANCE SYSTEMS DEPOSIT INSURER DEPOSIT INSURERS DEPOSIT WITHDRAWALS DEPOSITOR DEPOSITORS DISSOLUTION DIVIDEND DIVIDENDS EFFECTIVE DEPOSIT INSURANCE EMERGENCY LIQUIDITY ASSISTANCE EXCESS LIQUIDITY EXCLUSION EXTERNAL AUDITORS EXTERNALITIES FINANCIAL ASSETS FINANCIAL ASSISTANCE FINANCIAL CRISIS FINANCIAL DIFFICULTIES FINANCIAL FLOWS FINANCIAL INSTABILITY FINANCIAL INSTITUTION FINANCIAL INSTITUTIONS FINANCIAL INTEGRATION FINANCIAL MANAGEMENT FINANCIAL REFORM FINANCIAL SAFETY FINANCIAL SECTOR ASSESSMENT FINANCIAL STABILITY FINANCIAL SUPPORT FINANCIAL SYSTEM FINANCIAL SYSTEMS FORBEARANCE FOREIGN ASSETS FOREIGN BANKS FRAUD FUND MANAGEMENT FUNDING SOURCES GOVERNMENT BONDS GOVERNMENT DEPOSITS GOVERNMENT SECURITIES GROSS SETTLEMENT HOLDING HOLDING COMPANY HOLDINGS HOST COUNTRIES HUMAN RESOURCES ILLIQUID BANKS ILLIQUIDITY INDIRECT COSTS INDIVIDUAL BANK INDIVIDUAL BANKS INFORMATION SHARING INSTRUMENT INSUFFICIENT FUNDS INSURANCE AGENCY INSURANCE PREMIUM INSURED DEPOSITS INTEREST RATES INTERNATIONAL BANK INTERNATIONAL BANKS INTERNATIONAL FINANCIAL STATISTICS INTERNATIONAL RESERVES INTERNATIONAL STANDARDS INVESTMENT POLICIES INVESTMENT POLICY JUDICIAL REVIEW LARGE DEPOSIT LEGAL ASSISTANCE LEGAL FRAMEWORK LEGAL INSTRUMENTS LEGAL PROTECTION LEGAL REQUIREMENTS LEGAL TENDER LEGISLATION LENDER LENDER OF LAST RESORT LETTERS OF CREDIT LEVELS OF LIQUIDITY LIQUID ASSET LIQUID ASSETS LIQUID RESOURCES LIQUIDATION LIQUIDATION PROCESS LIQUIDITY ASSISTANCE LIQUIDITY MANAGEMENT LIQUIDITY NEEDS LIQUIDITY PROBLEMS LIQUIDITY REQUIREMENTS LIQUIDITY RISK LIQUIDITY RISKS LIQUIDITY SHOCK LIQUIDITY SHOCKS LIQUIDITY SHORTAGES LOAN LOCAL BANK LOCAL BANKS MALFEASANCE MANDATE MANDATES MARKET MECHANISMS MARKET RISK MARKET TRANSACTION MONETARY FUND MONEY SUPPLY MORAL HAZARD PARENT COMPANIES PAYMENT SYSTEM PENALTIES PENALTY PENSION PENSION FUNDS PORTFOLIOS PREPAYMENT PRIVATE FINANCIAL INSTITUTIONS PRIVATE FUNDS PROBLEM BANK PRUDENTIAL REQUIREMENTS PUBLIC FUNDS PUBLIC POLICY RECEIVER RECOVERY OF ASSETS RECOVERY RATE REGULATORY CONSTRAINTS REGULATORY FRAMEWORK REMEDY REPOS RESERVE RESERVE ACCOUNT RESERVE FUND RESERVE FUNDS RESERVE REQUIREMENTS RESOLUTION MECHANISM RESOLUTION MECHANISMS RESOURCE ALLOCATION RESTRUCTURING PROCESS RISK CHARACTERISTICS RISK MANAGEMENT RISK PERCEPTION SAFETY NET SAFETY NETS SETTLEMENT SHAREHOLDERS SMALL BANK SMALL BANKS SOLVENCY SOLVENCY PROBLEMS SOLVENT SOLVENT BANKS SOURCE OF FUNDS SUBSIDIARIES SUBSIDIARY SUPERVISORY AGENCIES SYSTEMIC CRISIS SYSTEMIC RISK SYSTEMIC STABILITY TECHNICAL SUPPORT TRANCHE TRANCHES TRANSACTION TRANSFER OF ASSETS TRANSFER OF LIABILITIES TRANSPARENCY TRUST FUND TRUSTEE International Monetary Fund World Bank El Salvador Financial Sector Assessment Program : Safety Nets and Crisis Management Arrangements |
| geographic_facet |
Latin America & Caribbean El Salvador |
| description |
In El Salvador, the banking safety net
emergency liquidity assistance, resolution and deposit
insurance- faces particular challenges given it operate in
the context of official dollarization. The economy was
officially dollarized in 2000 with the adoption of the law
on financial integration and of the United States (US)
dollar as legal tender. Dollarization constrains a central
bank's ability to act as a lender of last resort (LOLR)
and provide emergency liquidity assistance (ELA). This note
discusses the weaknesses of the current framework and
recommendations to ensure the safety net functions more
effectively and efficiently. To address systemic liquidity
risk in the context of official dollarization, the Banco
Central de Reservas (BCR) should be provided with more
powers and funds to provide emergency liquidity assistance
to banks. The bank resolution scheme, which has not been
tested, and the deposit insurance fund, which has
insufficient funds, both need to be strengthened.
Appropriate roles and formal mechanisms to monitor and
manage systemic risk and events should be put in place.
However the roles and responsibilities of the various
institutions involved in the safety net are not always
consistent with their objectives, powers, and mandates,
while a well-specified strategy to preserve the stability of
the system (e.g., with clear responsibilities for monitoring
systemic risks and taking macro prudential decisions) and
definition or formal measurement of systemic risk have not
yet been established. Furthermore, coordination with foreign
supervisors of international banks does not include
designing contingency plans to address a possible
cross-border event. This paper is divided into following
four parts: part one is introduction; part two gives
systemic liquidity management and emergency liquidity
assistance; part three is bank resolution and deposit
insurance; and part four gives crisis management arrangements. |
| format |
Report |
| author |
International Monetary Fund World Bank |
| author_facet |
International Monetary Fund World Bank |
| author_sort |
International Monetary Fund |
| title |
El Salvador Financial Sector Assessment Program : Safety Nets and Crisis Management Arrangements |
| title_short |
El Salvador Financial Sector Assessment Program : Safety Nets and Crisis Management Arrangements |
| title_full |
El Salvador Financial Sector Assessment Program : Safety Nets and Crisis Management Arrangements |
| title_fullStr |
El Salvador Financial Sector Assessment Program : Safety Nets and Crisis Management Arrangements |
| title_full_unstemmed |
El Salvador Financial Sector Assessment Program : Safety Nets and Crisis Management Arrangements |
| title_sort |
el salvador financial sector assessment program : safety nets and crisis management arrangements |
| publisher |
Washington, DC |
| publishDate |
2017 |
| url |
http://documents.worldbank.org/curated/en/357511468023098128/El-Salvador-Safety-nets-and-crisis-management-arrangements-technical-note http://hdl.handle.net/10986/27766 |
| _version_ |
1764464525114867712 |
| spelling |
okr-10986-277662021-04-23T14:04:42Z El Salvador Financial Sector Assessment Program : Safety Nets and Crisis Management Arrangements International Monetary Fund World Bank ACCESSIBILITY ACCOUNTABILITY ACCOUNTING ADEQUATE LEGAL PROTECTION ARBITRAGE ASSET STRIPPING ASSOCIATION OF DEPOSIT INSURERS BALANCE SHEET BANK DEPOSIT BANK FAILURE BANK HOLDINGS BANK INSOLVENCY BANK OFFICIALS BANK RESOLUTION SCHEME BANK RESTRUCTURING BANKING CRISIS BANKING LAW BANKING SUPERVISION BANKS CAPITAL ADEQUACY CAPITAL ADEQUACY RATIO CAPITALIZATION CASH RESERVES CENTRAL BANK CENTRAL BANKS COLLATERAL COMMERCIAL BANK COMMERCIAL BANK HOLDINGS COMMERCIAL BANKS CONFLICT OF INTEREST COOPERATIVE BANK COOPERATIVE BANKS COOPERATIVES CORPORATE GOVERNANCE CORRECTIVE ACTION CORRECTIVE ACTIONS CREDIT LINES CREDIT MARKET CREDIT RISK CREDIT RISK MANAGEMENT CREDITORS CROSS-BORDER BANKING CURRENCY CURRENCY BOARD DEBTS DEPOSIT DEPOSIT GUARANTEE DEPOSIT INSURANCE DEPOSIT INSURANCE AGENCY DEPOSIT INSURANCE COVERAGE DEPOSIT INSURANCE FUND DEPOSIT INSURANCE FUNDS DEPOSIT INSURANCE PREMIUMS DEPOSIT INSURANCE SCHEME DEPOSIT INSURANCE SYSTEM DEPOSIT INSURANCE SYSTEMS DEPOSIT INSURER DEPOSIT INSURERS DEPOSIT WITHDRAWALS DEPOSITOR DEPOSITORS DISSOLUTION DIVIDEND DIVIDENDS EFFECTIVE DEPOSIT INSURANCE EMERGENCY LIQUIDITY ASSISTANCE EXCESS LIQUIDITY EXCLUSION EXTERNAL AUDITORS EXTERNALITIES FINANCIAL ASSETS FINANCIAL ASSISTANCE FINANCIAL CRISIS FINANCIAL DIFFICULTIES FINANCIAL FLOWS FINANCIAL INSTABILITY FINANCIAL INSTITUTION FINANCIAL INSTITUTIONS FINANCIAL INTEGRATION FINANCIAL MANAGEMENT FINANCIAL REFORM FINANCIAL SAFETY FINANCIAL SECTOR ASSESSMENT FINANCIAL STABILITY FINANCIAL SUPPORT FINANCIAL SYSTEM FINANCIAL SYSTEMS FORBEARANCE FOREIGN ASSETS FOREIGN BANKS FRAUD FUND MANAGEMENT FUNDING SOURCES GOVERNMENT BONDS GOVERNMENT DEPOSITS GOVERNMENT SECURITIES GROSS SETTLEMENT HOLDING HOLDING COMPANY HOLDINGS HOST COUNTRIES HUMAN RESOURCES ILLIQUID BANKS ILLIQUIDITY INDIRECT COSTS INDIVIDUAL BANK INDIVIDUAL BANKS INFORMATION SHARING INSTRUMENT INSUFFICIENT FUNDS INSURANCE AGENCY INSURANCE PREMIUM INSURED DEPOSITS INTEREST RATES INTERNATIONAL BANK INTERNATIONAL BANKS INTERNATIONAL FINANCIAL STATISTICS INTERNATIONAL RESERVES INTERNATIONAL STANDARDS INVESTMENT POLICIES INVESTMENT POLICY JUDICIAL REVIEW LARGE DEPOSIT LEGAL ASSISTANCE LEGAL FRAMEWORK LEGAL INSTRUMENTS LEGAL PROTECTION LEGAL REQUIREMENTS LEGAL TENDER LEGISLATION LENDER LENDER OF LAST RESORT LETTERS OF CREDIT LEVELS OF LIQUIDITY LIQUID ASSET LIQUID ASSETS LIQUID RESOURCES LIQUIDATION LIQUIDATION PROCESS LIQUIDITY ASSISTANCE LIQUIDITY MANAGEMENT LIQUIDITY NEEDS LIQUIDITY PROBLEMS LIQUIDITY REQUIREMENTS LIQUIDITY RISK LIQUIDITY RISKS LIQUIDITY SHOCK LIQUIDITY SHOCKS LIQUIDITY SHORTAGES LOAN LOCAL BANK LOCAL BANKS MALFEASANCE MANDATE MANDATES MARKET MECHANISMS MARKET RISK MARKET TRANSACTION MONETARY FUND MONEY SUPPLY MORAL HAZARD PARENT COMPANIES PAYMENT SYSTEM PENALTIES PENALTY PENSION PENSION FUNDS PORTFOLIOS PREPAYMENT PRIVATE FINANCIAL INSTITUTIONS PRIVATE FUNDS PROBLEM BANK PRUDENTIAL REQUIREMENTS PUBLIC FUNDS PUBLIC POLICY RECEIVER RECOVERY OF ASSETS RECOVERY RATE REGULATORY CONSTRAINTS REGULATORY FRAMEWORK REMEDY REPOS RESERVE RESERVE ACCOUNT RESERVE FUND RESERVE FUNDS RESERVE REQUIREMENTS RESOLUTION MECHANISM RESOLUTION MECHANISMS RESOURCE ALLOCATION RESTRUCTURING PROCESS RISK CHARACTERISTICS RISK MANAGEMENT RISK PERCEPTION SAFETY NET SAFETY NETS SETTLEMENT SHAREHOLDERS SMALL BANK SMALL BANKS SOLVENCY SOLVENCY PROBLEMS SOLVENT SOLVENT BANKS SOURCE OF FUNDS SUBSIDIARIES SUBSIDIARY SUPERVISORY AGENCIES SYSTEMIC CRISIS SYSTEMIC RISK SYSTEMIC STABILITY TECHNICAL SUPPORT TRANCHE TRANCHES TRANSACTION TRANSFER OF ASSETS TRANSFER OF LIABILITIES TRANSPARENCY TRUST FUND TRUSTEE In El Salvador, the banking safety net emergency liquidity assistance, resolution and deposit insurance- faces particular challenges given it operate in the context of official dollarization. The economy was officially dollarized in 2000 with the adoption of the law on financial integration and of the United States (US) dollar as legal tender. Dollarization constrains a central bank's ability to act as a lender of last resort (LOLR) and provide emergency liquidity assistance (ELA). This note discusses the weaknesses of the current framework and recommendations to ensure the safety net functions more effectively and efficiently. To address systemic liquidity risk in the context of official dollarization, the Banco Central de Reservas (BCR) should be provided with more powers and funds to provide emergency liquidity assistance to banks. The bank resolution scheme, which has not been tested, and the deposit insurance fund, which has insufficient funds, both need to be strengthened. Appropriate roles and formal mechanisms to monitor and manage systemic risk and events should be put in place. However the roles and responsibilities of the various institutions involved in the safety net are not always consistent with their objectives, powers, and mandates, while a well-specified strategy to preserve the stability of the system (e.g., with clear responsibilities for monitoring systemic risks and taking macro prudential decisions) and definition or formal measurement of systemic risk have not yet been established. Furthermore, coordination with foreign supervisors of international banks does not include designing contingency plans to address a possible cross-border event. This paper is divided into following four parts: part one is introduction; part two gives systemic liquidity management and emergency liquidity assistance; part three is bank resolution and deposit insurance; and part four gives crisis management arrangements. 2017-08-14T19:47:20Z 2017-08-14T19:47:20Z 2010-11 Report http://documents.worldbank.org/curated/en/357511468023098128/El-Salvador-Safety-nets-and-crisis-management-arrangements-technical-note http://hdl.handle.net/10986/27766 English en_US CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo World Bank Washington, DC Economic & Sector Work :: Financial Sector Assessment Program Economic & Sector Work Latin America & Caribbean El Salvador |