## 1. Union économique et monétaire ouest africaine ## Source details **Canonical URL:** [1. Union économique et monétaire ouest africaine](https://www.imf.org/-/media/websites/imf/imported-full-text-pdf/external/pubs/ft/dp/2013/_afr1306.pdf) ## Other formats - [Markdown version](/-/media/websites/imf/imported-full-text-pdf/external/pubs/ft/dp/2013/_afr1306.pdf.md) - [Structured JSON version](/-/media/websites/imf/imported-full-text-pdf/external/pubs/ft/dp/2013/_afr1306.pdf.json) --- ### Aperçu de la structure du système financier - Le système financier de la West African Economic and Monetary Union (WAEMU) reste largement bank-based. - Le secteur bancaire comprend 106 banks and 13 financial institutions, qui détiennent plus de 90 percent of the financial system’s assets (about 54 percent of GDP end-2011). - Five banks account for 50 percent of banking assets. - Forte montée des banques étrangères (pan-African) conduisant à concurrence accrue et hétérogénéité. - Nonbank financial institutions, notamment les compagnies d’assurance, se développent mais restent globalement petites. - Marché des titres régional marginal hors secteur public : - Regional stock market based in Abidjan: 37 quoted companies as of end-2012. - Only 11 initial public offerings took place between 1998 and 2011. - Capitalization is about 12 percent of the WAEMU GDP in 2012. - Debt market mostly government paper and about 10 percent of the WAEMU GDP in 2012; pas de marché secondaire significatif. ### Microfinance et inclusion - La microfinance contribue fortement à l’accès aux services financiers pour les ménages à faibles revenus et les PME. - The WAEMU has 759 registered MFIs. - Sixty-one entities are classified as large institutions with assets or deposits above CFAF 2 billion and are supervised by the Banking Commission; these account for 90 percent of the MFI sector’s assets. - MFIs’ total loans amount to about 8 percent of total bank credit. - Les comptes MFIs élargissent l’accès financier total de 5 to about 15 percent of the population. - Dans certains pays (Benin, Senegal, Togo), MFIs ont aidé à porter l’accès global à more than 20 percent of the population. - Le secteur MFI est globalement profitable mais de nombreuses petites structures sont loss-making et dépendent fortement du financement des donors. ### Secteur bancaire : performances, structure et intermédiation - Bank credit to the economy increased substantially since the mid-2000s. - Bank credit ratio to GDP reached about 20 percent in 2012, up from 14 percent in 2010 (with an average credit growth rate of 6 percent annually). - Credit largely short-term and allocated mainly to manufacturing and services (retail and wholesale trade, hotels and restaurants). - Clients and business models vary fortement entre banques (grandes banques pan-African vs banques nationales parfois publiques). - Forte exposition des banques aux government securities et plus largement au public sector. - Emergence de cross-border (pan-African) banking groups : - Twenty large groups account for most of the banking system and engage in cross-border activities within the WAEMU. - Cross-border expansion often via acquisition by Moroccan and Nigerian groups. - Cross-border flows remain limited: about 1.6 percent of total lending in 2012. - Interbank market remains shallow: interbank loans < 2 percent of total bank loans historically; interbank rate broadly within policy corridor since 2009. - Regional stock market (BRVM) concentration: Sonatel and Ecobank account for close to 50 percent of market capitalization. ### Solidité, risques et conformité prudentielle - Situation moyenne: system banking liquid and well capitalized on average, but large heterogeneity across banks and countries. - Principaux risques identifiés : - High lending concentration in all countries. - High gross nonperforming loans (weak asset quality). - Rising sovereign-bank linkage: WAEMU banks hold over 70 percent of public debt issued by WAEMU sovereigns. - Broader exposure to public enterprises. - Cross-border banking groups can propagate foreign shocks; correlated portfolios increase systemic crisis probability. - Some groups large enough to be domestic systemically important financial institutions. - Conformité aux normes prudentielles: - Compliance varies; some banks in all countries breach capital adequacy ratio. - Améliorations fin 2012 reflètent en partie changements réglementaires (transformation ratio lowered from 75 to 50 percent; ratio on portfolio structure abolished) — signe de regulatory forbearance. - Certaines normes non alignées sur international practice (e.g., ratio on risk division less demanding). - Surveillance et données: - Financial soundness indicators are highly aggregated, available with long lags, and backward-looking. - Besoin d’une approche duale: granular (bank-by-bank) + aggregate supervision. - Données limitées ont entravé l’évaluation des expositions bancaires aux souverains WAEMU. ### Findings from the Stress Tests (Box 1) - Scope and calibration: - Performed for seven of eight WAEMU countries based on end-2011 data (two countries only end-2010 granular data). - Covered all banks; tested market risk, credit risk, and interest rate risk. - Excluded exchange rate and sovereign risks; no macroeconomic feedbacks; assumed no policy response. - Calibrated shocks included default by the largest individual borrower; interest rate spikes of 500 bps; liquidity shocks—deposit runs with losses of 5 percent of deposits per day for 10 days. - Key findings: - Limited interest rate risk: assets typically short-term; bonds held to maturity. - Limited liquidity risk overall; liquidity risk concentrated in smaller banks. - Severe sectoral/company concentration: the 50 largest companies account for one-third of total bank credit. - Weak asset quality: large NPL ratios even after provisioning; local accounting rules allow longer write-off periods. - Stress-test calibration figures and statistics (selected): - Interest rate spikes of 500 bps. - Deposit runs with losses of 5 percent of deposits per day for 10 days. - The 50 largest companies account for one-third of total bank credit. - WAEMU banks hold over 70 percent of public debt issued by WAEMU sovereigns. ### Selected Financial Soundness Indicators (WAEMU: 2005–12; percent unless otherwise indicated) - Regulatory capital to risk-weighted assets: 9.17 (2005 Dec.), 8.36 (2006 Dec.), 6.75 (2007 Dec.), 9.79 (2008 Dec.), 10.16 (2009 Dec.), 11.09 (2010 Dec.), 10.72 (2011 Dec.), 10.99 (2012 Jun.1) - Tier I capital to risk-weighted assets: 8.78 (2005 Dec.), 7.98 (2006 Dec.), 6.01 (2007 Dec.), 9.37 (2008 Dec.), 9.80 (2009 Dec.), 10.55 (2010 Dec.), 10.08 (2011 Dec.), 10.59 (2012 Jun.1) - Provisions to risk-weighted assets: 14.98 (2005 Dec.), 14.17 (2006 Dec.), 12.75 (2007 Dec.), 12.24 (2008 Dec.), 10.96 (2009 Dec.), 12.05 (2010 Dec.), 10.40 (2011 Dec.), 12.49 (2012 Jun.1) - Capital to total assets: 5.82 (2005 Dec.), 5.45 (2006 Dec.), 4.29 (2007 Dec.), 6.07 (2008 Dec.), 6.20 (2009 Dec.), 6.41 (2010 Dec.), 6.48 (2011 Dec.), 5.71 (2012 Jun.1) - Total loans to total assets: 63.44 (2005 Dec.), 61.91 (2006 Dec.), 59.06 (2007 Dec.), 59.41 (2008 Dec.), 57.56 (2009 Dec.), 55.27 (2010 Dec.), 55.17 (2011 Dec.), 55.29 (2012 Jun.1) - Gross NPLs to total loans: 19.90 (2005 Dec.), 20.50 (2006 Dec.), 18.90 (2007 Dec.), 19.20 (2008 Dec.), 17.20 (2009 Dec.), 17.58 (2010 Dec.), 15.92 (2011 Dec.), 16.17 (2012 Jun.1) - Provisioning rate: 66.88 (2005 Dec.), 66.17 (2006 Dec.), 65.74 (2007 Dec.), 68.05 (2008 Dec.), 61.45 (2009 Dec.), 63.68 (2010 Dec.), 64.23 (2011 Dec.), 64.96 (2012 Jun.1) - Net NPLs to total loans: 7.60 (2005 Dec.), 8.00 (2006 Dec.), 7.40 (2007 Dec.), 7.10 (2008 Dec.), 7.40 (2009 Dec.), 7.19 (2010 Dec.), 6.35 (2011 Dec.), 6.33 (2012 Jun.1) - Net NPLs to capital: 82.74 (2005 Dec.), 91.17 (2006 Dec.), 90.85 (2007 Dec.), 69.00 (2008 Dec.), 68.54 (2009 Dec.), 61.99 (2010 Dec.), 54.07 (2011 Dec.), 61.33 (2012 Jun.1) - Liquid assets to total assets: 41.79 (2005 Dec.), 40.89 (2006 Dec.), 38.13 (2007 Dec.), 36.64 (2008 Dec.), 33.93 (2009 Dec.), 33.27 (2010 Dec.), 33.59 (2011 Dec.), 33.25 (2012 Jun.1) - Liquid assets to total deposits: 55.15 (2005 Dec.), 54.41 (2006 Dec.), 50.95 (2007 Dec.), 50.43 (2008 Dec.), 46.04 (2009 Dec.), 45.12 (2010 Dec.), 46.07 (2011 Dec.), 46.61 (2012 Jun.1) - Total loans to total deposits: 83.76 (2005 Dec.), 82.38 (2006 Dec.), 78.89 (2007 Dec.), 81.76 (2008 Dec.), 78.45 (2009 Dec.), 83.97 (2010 Dec.), 84.29 (2011 Dec.), 86.59 (2012 Jun.1) - Total deposits to total liabilities: 75.74 (2005 Dec.), 75.15 (2006 Dec.), 74.87 (2007 Dec.), 72.66 (2008 Dec.), 73.37 (2009 Dec.), 74.12 (2010 Dec.), 72.91 (2011 Dec.), 71.35 (2012 Jun.1) ### Marchés régionaux et instruments (Box 2 and market developments) - BRVM equity market: - Launched 1998 with 36 listed companies; 37 listed in early 2013. - Market capitalization rose from 4.3 percent of GDP in 2002 to 10.1 percent of GDP in 2012. - Total capitalization of the BRVM debt market about 2 percent of GDP at end-2012. - Average market return in 2011: 8.6 percent in local currency; 27 companies paid dividends. - Majority of investor accounts located in Côte d’Ivoire. - Sovereign issuance: - Most government debt issued to banks through BCEAO auctions; mostly Treasury bills with relatively short average maturity and eligible for BCEAO refinancing. - Outstanding government debt on BCEAO-organized auction market about 10 times larger than that issued at the BRVM. - Market infrastructure reforms planned/launched (2013): - Introduction of collateralized operations (repos). - Rollout of an electronic platform to auction and trade liquidity and government paper (“application Trésor”). - Introduction of primary dealers to accelerate development of secondary government debt market. - Launch of a regional debt agency (“Agence UMOA-Titres”). - Two financial agents granted securitization licenses in early 2013. - Shift to continuous trading and new electronic data management systems. ### Introduction of ratings and market access - Before 2012: corporations issuing bonds required a 100 percent guarantee (added about 1–2 percentage points to interest costs). - Reform: guarantee abolished if company rated investment grade or higher; for lower-rated companies guarantee requirement remains but may be less than 100 percent. - Currently, all private issuances are from companies rated lower than (local) investment grade. - Statistics and reforms: - 100 percent (guarantee required pre-2012 for bond issuers). - 1–2 percentage points (added to interest rate costs by guarantees). - Two financial agents (granted securitization licenses in early 2013). - 2013 (year for implemented and planned reforms). ### Contraintes sur la politique monétaire et transmission (BCEAO) - Shallow markets limit countercyclical fiscal space and affect monetary transmission and access to financial services. - BCEAO instruments: policy interest rates, liquidity auctions and standing facilities, reserve requirements. - BCEAO balance sheet ≈ one-third of the banking system’s balance sheet. - Empirical effect: increase of 100 basis points in the BCEAO’s policy rate reduces private credit growth by about 3 percentage points one quarter later and by 4 percentage points (cumulative) after one year. - Correlation between policy rates and the interbank rate ≈ 0.5. - Weak transmission reasons: shallow interbank market, absence of secondary government securities market, shallow stock exchange, persistent excess liquidity, segmented banking system, imperfect information, limited competition, state-owned banks. ### Macroprudential, crisis management, and resolution - Macroprudential needs: - Strengthen surveillance, early warning systems, sectoral balance sheets, cross-border linkage monitoring, disaggregated data, and stress testing capacity. - Reserve requirements currently the only macroprudential instrument; harmonization limits use for asymmetric shocks. - Priority: develop monitoring system and improve microprudential regulation and supervision. - Emergency liquidity assistance (ELA): - BCEAO currently lacks explicit ELA mandate; recommend ex ante discussion on BCEAO involvement and indemnification by governments. - Recovery and resolution: - Banking Commission needs stronger early detection and prompt corrective action. - WAEMU resolution regime lacks key FSB-recommended attributes; many attributes marked “No” or “Not clear” in Table 4 (selected examples): - Protect depositors/policy holders: No - Not rely on public solvency support: No - Provide for speed, transparency, predictability: No - Stabilization options by sale/bridge/recapitalization: No - Recommendations: strengthen Banking Commission powers (asset transfer, mergers, shareholder changes), establish ex ante burden-sharing, require explicit parent company support when licensing, consider privatization of public banks. - Financial safety nets: - Deposit insurance system expected to be launched in 2013 to cover banks and MFIs. - Financial Stability Fund (FSF) under design to avoid sovereign debt payment incidents; issues include financing, conditionality, market vs concessional terms, seniority of FSF financing. ### Principales recommandations et priorités politiques - Renforcer significativement cadre réglementaire et de supervision pour adresser risques existants et émergents. - Develop consolidated supervision for regional banking groups and strengthen cooperation with foreign supervisors. - Recognize and limit sovereign-bank nexus; consider a nonzero weight on government paper in capital adequacy calculations. - Réviser la réglementation microprudente pour aligner certaines normes sur international best practice, en tenant compte du contexte régional: - Risk concentration limits (abaisser limite de 75 percent of capital vers norme internationale). - Classification des créances et provisioning (aligner sur 90 days NPL international norm vs actuel 180 days). - Provisioning rules, exploitation de la transition vers IFRS. - Utiliser la transition vers Basel II pour corriger de nombreuses faiblesses. - Renforcer prévention et gestion des crises: - Compilation et publication régulières et timely des financial soundness indicators pour tous les pays membres. - Conduire stress tests réguliers comme système d’alerte précoce. - Améliorer le cadre de résolution pour réduire coût fiscal des interventions. - Donner de plus larges pouvoirs au superviseur et assurer collaboration étroite pour les groupes cross-border. - Développer marchés régionaux (interbank et secondary government debt market), élargir base d’investisseurs, éviter nouvelles distorsions favorisant la dette souveraine (taxation, zero risk weighting, BCEAO refinancing eligibility). *Source: _afr1306 - 1. Union économique et monétaire ouest africaine - (PDF chapter/section).* ### 1. Union é conomique et moné taire ouest africaine - ### 1. Union économique et monétaire ouest africaine ### Aperçu de la structure du système financier - Le système financier de la West African Economic and Monetary Union (WAEMU) reste largement bank-based. - Le secteur bancaire comprend 106 banks and 13 financial institutions, qui détiennent plus de 90 percent of the financial system’s assets (about 54 percent of GDP end-2011). - Five banks account for 50 percent of banking assets. - Évolution de la propriété : forte montée des banques étrangères (pan-African), entraînant une concurrence accrue et une hétérogénéité croissante. - Nonbank financial institutions, notamment les compagnies d’assurance, se développent mais restent globalement petites. - Le marché des titres régional est marginal hors secteur public : - Regional stock market based in Abidjan: 37 quoted companies as of end-2012. - Only 11 initial public offerings took place between 1998 and 2011. - Capitalization is about 12 percent of the WAEMU GDP in 2012. - Debt market consists mostly of government paper and is about 10 percent of the WAEMU GDP in 2012; there is no significant secondary debt market. ### Microfinance et inclusion - La microfinance contribue fortement à l’accès aux services financiers pour les ménages à faibles revenus et les PME. - The WAEMU has 759 registered MFIs. - Sixty-one entities are classified as large institutions with assets or deposits above CFAF 2 billion and are supervised by the Banking Commission; these account for 90 percent of the MFI sector’s assets. - MFIs’ total loans amount to about 8 percent of total bank credit. - Les comptes MFIs élargissent l’accès financier total de 5 to about 15 percent of the population. - Dans certains pays (Benin, Senegal, Togo), MFIs ont aidé à porter l’accès global à more than 20 percent of the population. - Le secteur MFI est globalement profitable mais de nombreuses petites structures sont loss-making et dépendent fortement du financement des donors. ### Secteur bancaire : performances et structure - Bank credit to the economy increased substantially since the mid-2000s. - Bank credit ratio to GDP reached about 20 percent in 2012, up from 14 percent in 2010 (with an average credit growth rate of 6 percent annually). - Credit is largely short-term and allocated mainly to manufacturing and services (notably retail and wholesale trade, hotels and restaurants). - Clients and business models vary fortement entre banques (grandes banques pan-African vs banques nationales parfois publiques). - Les banques sont très exposées aux government securities et plus largement au public sector. - Emergence de cross-border (pan-African) banking groups : - Twenty large groups account for most of the banking system and engage in cross-border activities within the WAEMU. - Cross-border banking expansion souvent via l’acquisition de banques domestiques (notamment par des groupes Moroccan et Nigerian). - Cross-border flows remain limited: about 1.6 percent of total lending in 2012. - Banking remains principalement domestically conducted; intra-regional lending flows sont faibles. ### Solidité, risques et conformité prudentielle - Globalement, le système bancaire est liquide and well capitalized on average, mais la situation varie fortement across banks and countries. - Hétérogénéité marquée en termes de taille, couverture géographique, profitability, et vulnérabilités. - Principaux risques identifiés : - Lending concentration is high in all countries of the region. - Quality of assets: high gross nonperforming loans. - Rising sovereign-bank linkage (exposition croissante des banques aux sovereigns), a potential systemic risk. - Broader exposure to public sectors (via public enterprises) is even more substantial. - Cross-border banking groups may propagate foreign shocks; correlated portfolios across large groups can increase systemic crisis probability. - Some banking groups are large enough to be considered domestic systemically important financial institutions. - Compliance with prudential norms remains low for a number of ratios: - Compliance varies across countries and ratios. - Some banks in all countries breach the capital adequacy ratio. - Improvements in late 2012 partly reflected changes to two ratios (transformation ratio lowered from 75 to 50 percent; ratio on portfolio structure abolished), suggesting regulatory forbearance. - Some prudential norms are not aligned with international standards (e.g., the ratio on risk division is less demanding than international practice). - Surveillance tools and data limitations: - Financial soundness indicators are highly aggregated, available with long lags, and backward-looking. - Stress tests (bank-by-bank) and FSIs both point to the need for a dual (granular + aggregate) supervisory approach. - Lack of data limited assessment of bank exposures to WAEMU sovereigns. ### Marchés régionaux et intermédiation - Regional stock market (BRVM) small and concentrated: Sonatel and Ecobank account for close to 50 percent of market capitalization. - Debt market dominated by government paper; absence of a significant secondary market. - Interbank market remains shallow. - Limited convergence of cross-country lending rates implies limited financial integration. ### Principales recommandations et priorités politiques - Strengthen regulatory and supervisory framework significantly to address existing and emerging risks. - Develop supervision on a consolidated basis for regional banking groups and strengthen cooperation with supervisors in countries where these groups operate. - Recognize and limit sovereign-bank nexus, including considering a nonzero weight on government paper in capital adequacy calculations. - Revise microprudential regulation to align certain prudential standards more closely with international best practice, taking into account regional context—examples: - Risk concentration limits. - Classification of claims. - Provisioning rules. - Use the move to Basel II as an opportunity to address many of these issues. - Strengthen financial crisis prevention and management framework: - Increase transparency via regular and timely compilation and publication of financial soundness indicators for all member countries. - Conduct regular stress tests as part of an early warning system. - Improve bank resolution framework to reduce fiscal cost of government intervention. - Provide broader powers to the supervisor and ensure close collaboration with other supervisors for cross-border groups. *Source: _afr1306 - 1. Union économique et monétaire ouest africaine - (PDF chapter/section).* ### Box 1 . Banking System Soundness: Findings from the Stress Tests ### Box 1 . Banking System Soundness: Findings from the Stress Tests ### Methodology of the Stress Tests - Performed in collaboration with the authorities on the banking systems of seven of the eight West African Economic and Monetary Union (WAEMU) countries; data for Guinea Bissau were not available. - Based on end-2011 data; for two countries, granular data were available only for end-2010. - Covered all banks—public, private, and foreign-owned—and tested for market risk, credit risk, and interest rate risk. - Stress tests did not include exchange rate risks (given the credible peg to the euro) or sovereign risks (insufficient data). - Tests did not incorporate macroeconomic feedbacks or other second-round effects, and assumed no policy response. - Calibrated large but plausible shocks, including: - Default by the largest individual borrower. - Interest rate spikes of 500 bps. - Liquidity shocks—deposit runs with losses of 5 percent of deposits per day for 10 days. ### Key Findings from the Stress Tests - Limited interest rate risk: - Banks’ asset sides are typically short-term, reducing maturity mismatches. - Bonds are typically held until maturity, making banks in most countries resistant to large changes in interest rates. - Limited liquidity risk: - Large liquidity buffers in most banks; only smaller ones face liquidity risks. - Severe sectoral/company concentration: - Lack of economic diversification and a large informal sector lead banks to concentrate lending on only a few sectors and corporations. - In the WAEMU, the 50 largest companies account for one-third of total bank credit. - This concentration is a major vulnerability and can be systemic if banks are substantially exposed to the same large borrower. - Weak asset quality: - Generally weak quality of assets reflected in large nonperforming loan (NPL) ratios (even after provisioning). - Local accounting rules take longer to write off NPLs compared to most jurisdictions; some NPLs likely old and potentially reflecting difficulties in exercising guarantees through the judicial system. - Data on NPL flows were not available to assess recent trends. ### Other Vulnerabilities Not Explored in the Stress Tests - Political instability: - Risk is high in the region, as shown by crises in Côte d’Ivoire, Mali, and Guinea-Bissau in the past two to three years. - Weather-related risks: - The agricultural sector’s importance subjects the system to climate hazards (floods, droughts, etc.) that can cause large, exogenous shocks. - Sovereign-bank relationship: - WAEMU banks hold over 70 percent of public debt issued by WAEMU sovereigns, and cross-border holdings are sometimes large. - In late 2010 in Côte d’Ivoire, more than half of the debt was held by residents of other WAEMU countries, generally banks. - A default on this debt could have created a systemic bank crisis in the region. ### Selected Financial System Structure and Soundness Indicators (from source tables and figures) - Stress-test calibration figures: - Interest rate spikes of 500 bps. - Deposit runs with losses of 5 percent of deposits per day for 10 days. - Concentration statistic: - The 50 largest companies account for one-third of total bank credit. - Sovereign exposure: - WAEMU banks hold over 70 percent of public debt issued by WAEMU sovereigns. - Table 2 excerpt (WAEMU: Financial Soundness Indicators 2005–12; in percent, unless otherwise indicated) - Regulatory capital to risk-weighted assets: 9.17 (2005 Dec.), 8.36 (2006 Dec.), 6.75 (2007 Dec.), 9.79 (2008 Dec.), 10.16 (2009 Dec.), 11.09 (2010 Dec.), 10.72 (2011 Dec.), 10.99 (2012 Jun.1) - Tier I capital to risk-weighted assets: 8.78 (2005 Dec.), 7.98 (2006 Dec.), 6.01 (2007 Dec.), 9.37 (2008 Dec.), 9.80 (2009 Dec.), 10.55 (2010 Dec.), 10.08 (2011 Dec.), 10.59 (2012 Jun.1) - Provisions to risk-weighted assets: 14.98 (2005 Dec.), 14.17 (2006 Dec.), 12.75 (2007 Dec.), 12.24 (2008 Dec.), 10.96 (2009 Dec.), 12.05 (2010 Dec.), 10.40 (2011 Dec.), 12.49 (2012 Jun.1) - Capital to total assets: 5.82 (2005 Dec.), 5.45 (2006 Dec.), 4.29 (2007 Dec.), 6.07 (2008 Dec.), 6.20 (2009 Dec.), 6.41 (2010 Dec.), 6.48 (2011 Dec.), 5.71 (2012 Jun.1) - Total loans to total assets: 63.44 (2005 Dec.), 61.91 (2006 Dec.), 59.06 (2007 Dec.), 59.41 (2008 Dec.), 57.56 (2009 Dec.), 55.27 (2010 Dec.), 55.17 (2011 Dec.), 55.29 (2012 Jun.1) - Gross NPLs to total loans: 19.90 (2005 Dec.), 20.50 (2006 Dec.), 18.90 (2007 Dec.), 19.20 (2008 Dec.), 17.20 (2009 Dec.), 17.58 (2010 Dec.), 15.92 (2011 Dec.), 16.17 (2012 Jun.1) - Provisioning rate: 66.88 (2005 Dec.), 66.17 (2006 Dec.), 65.74 (2007 Dec.), 68.05 (2008 Dec.), 61.45 (2009 Dec.), 63.68 (2010 Dec.), 64.23 (2011 Dec.), 64.96 (2012 Jun.1) - Net NPLs to total loans: 7.60 (2005 Dec.), 8.00 (2006 Dec.), 7.40 (2007 Dec.), 7.10 (2008 Dec.), 7.40 (2009 Dec.), 7.19 (2010 Dec.), 6.35 (2011 Dec.), 6.33 (2012 Jun.1) - Net NPLs to capital: 82.74 (2005 Dec.), 91.17 (2006 Dec.), 90.85 (2007 Dec.), 69.00 (2008 Dec.), 68.54 (2009 Dec.), 61.99 (2010 Dec.), 54.07 (2011 Dec.), 61.33 (2012 Jun.1) - Liquid assets to total assets: 41.79 (2005 Dec.), 40.89 (2006 Dec.), 38.13 (2007 Dec.), 36.64 (2008 Dec.), 33.93 (2009 Dec.), 33.27 (2010 Dec.), 33.59 (2011 Dec.), 33.25 (2012 Jun.1) - Liquid assets to total deposits: 55.15 (2005 Dec.), 54.41 (2006 Dec.), 50.95 (2007 Dec.), 50.43 (2008 Dec.), 46.04 (2009 Dec.), 45.12 (2010 Dec.), 46.07 (2011 Dec.), 46.61 (2012 Jun.1) - Total loans to total deposits: 83.76 (2005 Dec.), 82.38 (2006 Dec.), 78.89 (2007 Dec.), 81.76 (2008 Dec.), 78.45 (2009 Dec.), 83.97 (2010 Dec.), 84.29 (2011 Dec.), 86.59 (2012 Jun.1) - Total deposits to total liabilities: 75.74 (2005 Dec.), 75.15 (2006 Dec.), 74.87 (2007 Dec.), 72.66 (2008 Dec.), 73.37 (2009 Dec.), 74.12 (2010 Dec.), 72.91 (2011 Dec.), 71.35 (2012 Jun.1) ### Observations on Market Structure and Microfinance (selected) - Interbank market activity remains limited: - Interbank loans have amounted to less than 2 percent of total bank loans in the past five years. - The interbank rate has remained broadly within the policy rate corridor since 2009. - BCEAO still needs to inject massive amounts of liquidity to a large number of banks that cannot get this liquidity from the market. - Microfinance sector: - Rapid expansion followed by consolidation; more than 100 institutions have been closed in Senegal. - Example: a 2011 survey in Benin revealed 721 MFIs operating then but only 226 licensed. - Outstanding credit in microfinance has increased significantly in most countries. - Larger MFIs can get refinancing from banks; loans recently became eligible for refinancing at the Central Bank of West African States (BCEAO); smaller MFIs cannot avail themselves of this option. - The MFI reorganization: institutions with assets and/or deposits of more than CFAF 2 billion now supervised by the WAEMU Banking Commission; smaller institutions remain supervised by national authorities. *Source: Box 1 . Banking System Soundness: Findings from the Stress Tests (excerpt).* ### Box 2. (continued) ### Box 2. (continued) ### Interbank Market and Liquidity - Outstanding government debt issued on the BCEAO-organized auction market is about 10 times larger than that issued at the BRVM. - The interbank market: - One-day contracts have been replaced with one-week contracts. - The interbank rate has broadly remained within the policy rate corridor. - One-day, One week, One month, Three months maturities are observed. - Excess reserves and BCEAO refinancing: - Excess reserves are defined as the difference between required reserves and actual reserves at the BCEAO. - However, the interbank market does not sufficiently absorb and reallocate liquidity in the system and banks increase borrowing from the BCEAO. - Market structure and behavior: - The amount of outstanding credit has increased from 2007 onwards. - The share of credit on the interbank market to total bank credit has remained broadly constant at low levels (Note: 2012 refers to end September). ### Debt and Equity Markets - BRVM (regional equity market): - Launched in 1998 with 36 listed companies; the number of companies listed remained broadly stable, with 37 in early 2013. - Market capitalization increased from 4.3 percent of GDP in 2002 to 10.1 percent of GDP in 2012. - Total capitalization of the BRVM debt market stood at about 2 percent of GDP at end-2012. - The BRVM is not a significant source of financing for the private sector; there is no significant secondary market for BRVM-listed securities. - The average market return in 2011 was 8.6 percent in local currency, and 27 companies paid dividends. - The big majority of investors’ accounts is located in Côte d’Ivoire. - Sovereign issuance and banks: - Most government debt is still issued to banks through auctions organized by the BCEAO and is mostly in the form of Treasury bills with relatively short average maturity and can be used for refinancing at the BCEAO. - There is no significant secondary market for this type of government debt. - Private sector issuance until recently required a 100 percent guarantee by a certified institution (e.g., the West African Development Bank), which added the equivalent of 1–2 percentage points to issuance costs. - Syndication and concentration: - Côte d’Ivoire dominates the few issuances by syndication. ### Systemic Risk and Financial Surveillance - Definition and dimensions: - Systemic risk: any threat of disruption to financial services caused by impairment of all or parts of the financial system with potential serious negative consequences for the real economy. - Decomposed into time-series risk (buildup over time interacting with macro cycle) and cross-sectional risk (size, complexity, interconnectedness). - Senegal pilot findings (implications for WAEMU): - Time-series systemic risk might be limited at this juncture; no sector seems highly leveraged in Senegal. - Banks tend to finance mostly prime borrowers with short-term credit such as trade finance. - Risks are likely low except for concentration risk. - Rapidly evolving systemic linkages: - Cross-sector linkages: banks increasingly lending to sovereigns through the regional market. - Cross-border linkages: intensifying as large WAEMU banks and foreign banks (especially from Morocco and Nigeria) expand in the region. - Cross-institution linkages: increasing linkages between banks and insurance companies and MFIs via equity ownership, debt holdings, or deposits. - Institutional responsibilities and arrangements: - Banking sector and MFIs with more than CFAF 2 billion in deposits or loans are supervised by the WAEMU Banking Commission; smaller MFIs are supervised by national authorities. - The regional financial market is supervised by CREPMF. - Ministries of Finance, together with the regional regulator (CIMA), supervise the insurance sector. - The Financial Stability Committee is responsible for macroprudential supervision at the regional level. - Banking licenses are provided by the BCEAO after a qualified opinion by the WAEMU Banking Commission; troubled banks and subsidiaries are expected to be supported by the governments of the countries in which they are located, not of the country of the parent company. ### Financial Development: Breadth, Depth, and Access (Benchmarking) - Banking systems have significantly deepened in all WAEMU countries in recent years; most meet or exceed main statistical benchmarks for depth. - Togo, Senegal, and Benin have the deepest banking systems in absolute terms; Guinea-Bissau and Niger the shallowest. - Breadth: - Generally limited across the WAEMU. - Competition proxied by asset concentration of the three largest banks appears relatively low in all countries and seems to have decreased in recent years. - Credit to the public sector as a share of GDP has increased substantially. - Life insurance is more developed than indicated by the benchmarks. - The number of companies listed at the BRVM is very low compared to benchmarks; active trading limited to a few firms. - Access: - Access to finance has increased substantially in all countries and is in line with or exceeds structural benchmarks in most countries. - MFIs contributed importantly to access, particularly in Benin, Togo, and Senegal. - Comparisons with peers: - Private credit to GDP in the WAEMU is on average comparable to the SSA average, larger than in Ghana, but significantly lower than in Kenya. - Asset concentration remains high in the WAEMU relative to Ghana and Kenya. - Access to finance is an area where the WAEMU is lagging behind comparators (Kenya and Ghana). ### Constraints on Monetary Policy from Shallow Financial Markets - Shallow financial markets imply: - Limited scope for countercyclical fiscal policies due to limits in amounts governments can raise on regional market, affecting rollover risk, borrowing costs, and public investment financing. - Adverse effects on monetary policy transmission and on firms’ and households’ access to financial services. - BCEAO capacity and instruments: - Under the current exchange rate arrangement, the BCEAO has scope for an active monetary policy in the short to medium term. - Empirical analysis suggests money supply changes have been mainly driven by changes in net domestic assets, not net foreign assets. - BCEAO has a set of instruments (policy interest rates, liquidity auctions and standing facilities, and reserve requirements). - BCEAO balance sheet represents about a third of the balance sheet of the banking system. - Effectiveness of transmission channels: - Bank lending channel appears most effective: an increase of 100 basis points in the BCEAO’s policy rate is found to reduce private credit growth by about 3 percentage points one quarter later and by 4 percentage points (cumulative) after one year. - Correlation between policy rates and the interbank rate is about 0.5. - Correlation between money market rates and bank lending rates is small with respect to the WAEMU average, very heterogeneous, and even negative in some countries. - Little evidence of a statistically significant impact of policy rate changes on Treasury bill rates and asset prices. - Reasons for weak transmission: - Shallowness of interbank market, absence of secondary government securities market, and shallow stock exchange break transmission links. - Persistent excess liquidity and segmented banking system: - Reluctance of banks to trade liquidity forces liquidity injections from the BCEAO. - Banks hold large precautionary excess reserves due to weaknesses in payments systems (e.g., remote branches needing cash). - High average liquidity makes it hard for BCEAO to focus on overall liquidity management and limits signals from interbank market. - Credit rationing due to imperfect information (limited audited company statements, absence of credit bureaus). - Limited bank competition and presence of state-owned banks can blunt transmission as monetary changes may be absorbed in profitability or preferred lending practices. ### Obstacles and Recommendations for Further Deepening with Stability - Key obstacles identified (many require national authorities, some regional): - Imperfect information on borrowers (limited audited company statements, absence of credit bureaus) → adverse selection and moral hazard → credit rationing. - Weak business and judicial environments, including absence of formalized property rights → difficulty using land as collateral. - A tax regime not favorable to financial activities. - Insufficient financial skills and expertise. - Regional priorities and reforms: - Development of key regional markets (interbank market and secondary government debt market) is a priority; major reforms expected to be launched by mid-2013, including: - Introduction of collateralized operations (repos) to address reluctance of liquid banks to lend to illiquid ones. - Rollout of an electronic platform to auction and trade liquidity and government paper (“application Trésor”). - Introduction of primary dealers to accelerate development of secondary government debt market. - Launch of a regional debt agency (“Agence UMOA-Titres”) to advise national treasuries on debt management, improve issuance coordination, and contribute to government debt market development and liquidity management. - Broadening the investor base in the government debt market to reduce rollover risks, lower interest rates, and potentially extend maturities. - Addressing distortions that may have hampered private debt market development: - Distortions include tax advantages for sovereign paper, zero risk weighting for government bonds, and eligibility for refinancing at the BCEAO. - Recommendation: avoid providing new incentives/distortions in favor of government paper and consider a more level playing field regarding taxation and risk weighting. - CREPMF reforms to support equity market development: - Measures to (i) improve the quality of financial information; (ii) develop skills and awareness toward equity finance of economic actors; and (iii) lower high entry costs to the equity market. *Source: IMF staff compilation from Box 2 (continued) of the WAEMU financial systems chapter.* ### Introduction of ratings . Before 2012, corporations that wanted ### Introduction of ratings ### Overview - Before 2012, corporations that wanted to issue bonds on the regional market were required to provide a 100 percent guarantee to investors. - Those guarantees added about 1–2 percentage points to interest rate costs. - The reform abolished the guarantee requirement if the company is rated investment grade or higher. - For companies with lower ratings, the guarantee requirement remains but may be less than 100 percent. - Currently, all private issuances are from companies that are rated lower than (local) investment grade.14 ### Effects of ratings and disclosure - Ratings are not a panacea; problems with rating agencies during the subprime crisis have illustrated limitations. - Ratings can help reduce information asymmetries in other circumstances. - Ratings have yet to be fully accepted in the region as companies are reluctant to disclose information and data. ### Market developments and instruments - Enabling mortgage refinancing and securitization operations: - Two financial agents15 have been granted securitization licenses in early 2013. - The BCEAO reports that the WAEMU member states are currently reviewing options in this area. - More competitive pricing: - Commissions and fees on equity issuance, previously at very high levels even in international comparison, have been significantly reduced to improve access to the market and attract new clients. - Introduction of a new electronic data management system, including a surveillance mechanism of the secondary market. - Promoting innovative forms of banking, including mobile banking (and products) that are adapted to the local environment. ### Planned reforms and market infrastructure (2013) - Further reforms to improve market infrastructure and access are to be implemented in 2013, such as the shift to continuous trading. ### Key statistics and exact figures - 100 percent (guarantee required pre-2012 for bond issuers). - 1–2 percentage points (added to interest rate costs by guarantees). - Two financial agents (granted securitization licenses in early 2013). - 2013 (year for implemented and planned reforms). *Source: _afr1306 - Introduction of ratings (PDF excerpt).* ### introduction of a market for (small and) medium-sized enterprises with lower ### _afr1306 - introduction of a market for (small and) medium-sized enterprises with lower ### Market development and information quality - Introduce a market for (small and) medium-sized enterprises with lower fees and less stringent rules (e.g., on accounting records). - Increase supply of financial assets by listing public companies and strictly enforcing the 20 percent floating requirement—at least 20 percent of the company’s stock must be listed. - Regional cooperation: the BRVM is in talks with the stock exchange of Ghana and Nigeria for closer cooperation. - Information quality and dissemination: - Ongoing work on establishment of credit and guarantee bureaus is welcome and should be accelerated. - A regional approach is understandable but should not lead to excessive delays. - Efforts must continue to improve data quality, coverage, and timeliness, and data should be widely shared at national and regional levels between authorities and with the public. - Market abuse regulations—such as against insider information—currently under discussion should be introduced as soon as possible. - Observation: There are a number of companies in the WAEMU that are rated above investment grade; these companies currently use their ratings to improve credit conditions vis-à-vis banks rather than issuing on the securities market. ### Microprudential regulation and supervision: issues and recommendations - Compliance and enforcement - Compliance with microprudential norms needs to increase through strengthened supervision. - Partial compliance suggests enforcement weaknesses and reputational risk to the Banking Commission. - Insufficient resources hinder objectives such as on-site inspection of each bank every two years; recent staff increases may help but may not be sufficient. - The Banking Commission will need power to impose sufficiently elevated pecuniary penalties to deter inappropriate behavior. - Supervision of state-owned banks should be reviewed and strengthened to eliminate any (even apparent) political interference. - Improve reporting (ahead), including for supervision purposes. - Specific regulatory standards and practices to introduce or align with international best practice: - Concentration risk - Current limit to single risk exposure is 75 percent of capital, rather than the international norm of 25 percent. - Stress tests show concentration risk is the main threat to the banking system. - The 75 percent limit needs to be brought down progressively to international norms, done gradually to avoid disrupting financing to key economic sectors. - Nonperforming loan (NPL) classification and provisioning - International norms classify a loan as nonperforming after 90 days of nonpayment; WAEMU uses a looser definition of 180 days. - This suggests the NPL situation could be worse than current high ratios imply. - Provisioning requirements may need tightening: currently no provisioning is needed for two years for NPLs when initial credits were provided with guarantees. - Authorities may use planned changes in bank accounting and transition to IFRS standards to change these rules. - Sovereign risk weighting in capital requirements - Recent crises in Côte d’Ivoire, Guinea-Bissau, and Mali show sovereign debt cannot be seen as riskless in the region. - Broadening application of capital requirements - Include other risk categories besides counterparty risks, such as market risks and operational risks. - Timeliness and transparency of information - Quality and timeliness of data collected for analytical and prudential purposes need improvement and must be disseminated to markets. - Ensuring adequate regulatory perimeter - Cast the regulatory net wide enough so borrowers and lenders do not shift to unregulated or insufficiently regulated markets; prevent pyramid schemes as discussed in the Benin pilot. - Transition to Basel II - Authorities intend to launch a multiyear Basel II project shortly and expressed interest in IMF technical assistance. - Progress was made in reforming two prudential norms of questionable effectiveness. - Consolidated supervision and cross-border groups - Risk must be monitored on a consolidated basis; Banking Commission currently has limited capacity to oversee complex pan-African banking groups and lacks powers to supervise financial holding companies. - A study on moving toward consolidated supervision is being prepared. - Strengthen collaboration with other supervisors: - Currently a few cross-border cooperation agreements exist (e.g., with France, Guinea, and Morocco), and several are being worked out. - Only half a dozen protocols have been drawn up and signed; the effectiveness of such agreements is not assured in a crisis context. - Improved collaboration would require: signing cooperation protocols with the full range of foreign supervisors; setting up scheduled regular meetings structured by types of risks; instituting regular sharing of information; clarifying responsibilities of parent companies in recapitalizing branches and subsidiaries. - Consider taking the lead in proposing and organizing supervisory colleges for each pan-African banking group; coordinate with Nigerian supervisory authorities for Ecobank and United Bank for Africa; review legal obstacles to information sharing across supervisory bodies. - Note: Nigeria’s recent decision to adopt a regulation forbidding its banks to support their subsidiaries in case the capital requirements of the subsidiaries are to be increased and/or when they are making losses casts doubt on the effectiveness of some of these arrangements. ### Macroprudential regulation: surveillance and instruments - Rationale - Macroprudential policies are needed to supplement microprudential ones to enhance shock absorbers in capital and liquidity, limit overall leverage, and extend the regulatory perimeter to systemically important entities and instruments. - Comparison (proximate/ultimate objectives and calibration) - Table 3 comparison highlights differences between macroprudential (limit financial system-wide distress; minimize output costs; model of risk partly endogenous; interconnectedness important; calibration top-down) and microprudential (limit distress of individual institutions; consumer protection; model of risk exogenous; interconnectedness irrelevant; calibration bottom-up). - Macroprudential surveillance needs strengthening - Early warning systems - BCEAO has initiated work but faces data and methodological issues. - Financial data are scarce and their informational content may be limited due to shallow markets. - Past may be a poor guide because crises may be caused by exogenous shocks (e.g., political crisis, governance issues). - Coverage - Sectoral balance sheets (household, corporate, financial institutions, public sectors) are often critical but not readily available. - Gap could be partially filled through targeted surveys of firms, households, and corporations. - Cross-border linkages need closer monitoring; financial network risk analysis could be used. - Coverage of nonbank financial institutions (insurance companies, pension funds) needs expansion. - Disaggregation of information - Aggregated data can mask pockets of vulnerabilities; rely on disaggregated data to estimate distribution of risks across sectors and regions. - Disaggregated bank data can support risk-based supervision. - More active use of stress testing - Regional authorities decided to develop capacity in stress testing. - After improving basic stress testing and data quality/timeliness, refine exercises by incorporating macroeconomic variables and developing a range of plausible scenarios. - Publication of information - The FSC could consider producing and publishing a financial stability report. - Consider making disaggregated data publicly available. - Macroprudential instruments - Reserve requirements are presently the only instrument available to the authorities. - They have been harmonized a few years ago and therefore cannot be used to address asymmetric shocks. - Given limited correlation between macroeconomic and financial variables, instruments like countercyclical capital requirements may not be effective at this juncture. - Priority actions for authorities: (i) develop a monitoring system (a prerequisite); and (ii) improve microprudential regulation and supervision. ### Crisis management: preparedness, ELA, resolution, and safety nets - Emergency liquidity assistance (ELA) - ELA may be needed to provide liquidity to illiquid but solvent institutions; distinct from standing facilities which are available on demand with clear ex-ante rules. - BCEAO currently does not have an explicit mandate to provide ELA. - Ambiguity is double-edged: absence of mandate protects BCEAO’s balance sheet in principle, but historical evidence suggests central banks often get involved in systemic liquidity crises, risking their balance sheets. - Desirable for BCEAO and national governments to discuss ex ante how BCEAO could be involved in ELA and how it would be indemnified by governments for potential losses. - Recovery and resolution - Recovery strategies: regulators and management work to address problems to maintain a firm as a going concern. - Resolution strategies: structured and orderly closing of a firm if recovery fails, minimizing impacts on the financial system and essential services. - Banking Commission needs to improve early detection and rely on prompt and forceful corrective action. - Use financial and prudential information actively for risk-based supervision; improve reporting. - Many banks have been insolvent for long periods without being resolved; "zombie banks" have incentives to gamble for resurrection and can adversely affect other banks. - More forceful action would reduce intervention costs; absent an effective resolution regime, authorities may have to bail out banks at great public expense, perpetuating moral hazard. - WAEMU resolution regime lacks key attributes recommended by the Financial Stability Board (FSB). - Adoption of FSB recommendations would require strengthening regulator powers (e.g., Banking Commission able to order transfer of assets/liabilities, mergers, and changes in shareholders within a well-defined framework). - Coordination issues - Resolution involves the Banking Commission and concerned national governments; governments can appeal to the WAEMU Council of Ministers to reverse decisions. - Ex ante burden-sharing arrangements could reduce delays in resolution. - Authorities should seek explicit support from parent companies when banking licenses are examined to secure intervention resources from shareholders. - Privatization of public banks may be worth considering given their history as problem sources. - Accountability - Systematic investigation of responsibilities of directors, shareholders, and auditors involved in bankruptcy should be conducted, particularly where public funds were used. - Conclusions should inform suitability for future financial sector jobs and inappropriate behavior should be prosecuted to the full extent of the law. - Financial safety nets: deposit insurance and Financial Stability Fund (FSF) - Deposit insurance system - Authorities are working on a deposit insurance system, expecting it to be launched in 2013. - It would cover deposits with banks and microfinance institutions. - Authorities are considering coverage, payouts, and funding; staff suggested considering a role for deposit insurance in bank recovery to potentially reduce final cost. - Financial Stability Fund (FSF) - Authorities are working on an FSF whose main goal would be to avoid possible debt payment incidents by sovereigns facing liquidity problems. - Work is ongoing on key issues: financing of the FSF and terms of FSF financing. - Staff flagged issues to consider: identification of nature of shocks (temporary vs. permanent), addressing moral hazard (role of conditionality; market vs. concessional terms), and seniority of FSF financing (which could raise issues in case a restructuring is needed). ### FSB Key Attributes of Effective Resolution Regimes for Financial Institutions: WAEMU availability (Table 4) - Ensure continuity of systemically important financial services, and payment, clearing, and settlement functions: Not clear - Protect, where applicable and in coordination with relevant insurance schemes, depositors, insurance policy holders, and investors as are covered by such schemes, and ensure the rapid return of segregated client assets: No - Allocate losses to firm owners (shareholders) and unsecured and uninsured creditors in a manner that respects the hierarchy of claims: Yes - Not rely on public solvency support and not create an expectation that such support will be available: No - Avoid unnecessary destruction of value, and therefore seek to minimize overall costs of resolution and, where consistent with other objectives, losses for creditors: No - Provide for speed and transparency and as much predictability as possible through legal and procedural clarity and advanced planning for orderly resolution: No - Provide a mandate in law for cooperation, information exchange, and coordination domestically and with relevant foreign resolution authorities before and during a resolution: No - Ensure that nonviable firms can exit the market in an orderly way: Not clear - Be credible, and thereby enhance market discipline and provide incentives for market-based solutions: Not clear - Stabilization options that achieve continuity of systemically important functions by way of a sale or transfer, bridge institution, or officially mandated creditor-financed recapitalization: No - Liquidation options that provide for orderly closure and wind-down in a manner that protects insured depositors, insurance policy holders, and other retail customers: Not applicable *Italicized source: IMF staff report excerpt from the WAEMU chapter provided in the source content.* ### References ### _afr1306 - References ### References list - Al-Hussainy, Ed, Andrew Coppola, E. Feyen, Alain Ize, Kate Kibunha, and Hao cong Ren, 2010, “FinStat 2010: A Ready-to-Use Tool to Benchmark Financial Sectors Across Countries and Over Time” (Washington: World Bank). - Demirgüç-Kunt, Asli, Thorsten Beck, and Patrick Honohan, 2008, “Finance for All?: Policies and Pitfalls in Expanding Access” (Washington: World Bank). - Financial Stability Board, 2011, “FSB Key Attributes of Effective Resolution Regimes for Financial Institutions” (Basel, Switzerland). - Hansen, Lars Peter, 2012, “Challenges in Identifying and Measuring Systemic Risk.” Available via Internet: http://www.nber.org/papers/w18505 - Imam, Patrick, and Christian Koleras, 2013, “Senegal: Financial Depth and Stability,” African Department Paper (Washington: International Monetary Fund). - International Monetary Fund, 2010, “Macroprudential Policy: An Organizing Framework,” Background Paper (Washington: International Monetary Fund). - Kireyev, Alexei, 2013, “Monetary Policy under a Fixed Exchange Rate Arrangement: The Case of WAEMU” (Washington: International Monetary Fund). - Kolerus, Christina, and Aleksandra Zdzienicka, 2013, “Shocks and Shocks Absorption in the WAEMU,” African Department Papers (Washington: International Monetary Fund). - Schoenmaker, D., 2011, “The Financial Trilemma,” Economic Letters , Vol. 111, pp. 57–59. - Wagner, W., 2010, “Diversifi cation at Financial Institutions and Systemic Crises,” Journal of Financial Intermediation , Vol. 19, pp. 96–111. - 6240-025-BM1-5pass-r04.indd 396240-025-BM1-5pass-r04.indd 3910/3/2013 9:38:14 AM10/3/2013 9:38:14 AM *Source: _afr1306 - References (PDF).* --- _Source: https://www.imf.org/-/media/websites/imf/imported-full-text-pdf/external/pubs/ft/dp/2013/_afr1306.pdf_