Paraguay: Technical Assistance Report-Bank Resolution Framework and the Deposit Guarantee Fund

IMF Staff Country Reports, July 26, 2022

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Canonical URL: Paraguay: Technical Assistance Report-Bank Resolution Framework and the Deposit Guarantee Fund

The mission identified several areas where the existing deposit guarantee fund and bank resolution framework could be enhanced.
The Central Bank of Paraguay should consider developing an ongoing process of recovery and resolution planning and underpin it in its regulatory framework, in line with international modern practices.
Coordination with members of the financial safety net of other jurisdictions is key to ensuring adequate crisis preparedness during normal times and enabling adequate coordination of crisis management measures if there are concerns about the viability of a foreign-owned bank with operations in Paraguay.
A one-voice method of communication with the public should be considered, and advance preparation is paramount to ensure a smooth process for communications in the event of a crisis situation.
The resolution framework should stipulate clear and expeditious access to temporary funding, based on financial stability considerations, in situations where private sector funding has been exhausted or cannot achieve resolution objectives.

Develop an ongoing process of recovery and resolution planning and embed it within the Central Bank of Paraguay’s regulatory framework to align with international modern practices.
Enhance the deposit guarantee fund (DGF) and resolution framework to address identified shortcomings.
Establish protocols for coordination with foreign jurisdictions’ financial safety net members to improve cross-border crisis preparedness and crisis management for foreign-owned banks operating in Paraguay.
Adopt a one-voice communications strategy for public messaging during normal times and crisis situations; prepare communications in advance to ensure smooth execution during a crisis.
Specify in the resolution framework clear and expeditious access to temporary funding tied to financial stability considerations when private sector funding is exhausted or inadequate for achieving resolution objectives.

Pages: 39
Volume: 2022
Issue: 248
Series: Country Report No. 2022/248
DOI: https://doi.org/10.5089/9798400214912.002
Stock No: 1PRYEA2022003
ISBN: 9798400214912
ISSN: 1934-7685
Publication date (landing page): July 26, 2022
Subject: Financial crises, Financial regulation and supervision, International organization, Monetary policy
Keywords: Bank resolution, Bank resolution framework, Basel Core Principles, Bridge bank, C. Resolution tool, Crisis prevention, DGF coverage, DGF framework, resolution framework, RESOLUTION framework

Source: Paraguay: Technical Assistance Report-Bank Resolution Framework and the Deposit Guarantee Fund (IMF Staff Country Reports 2022, No. 248).