## El Salvador: Technical Note on Safety Nets and Crisis Management Arrangements

_IMF Staff Country Reports, February 11, 2014_

## Source details

**Canonical URL:** [El Salvador: Technical Note on Safety Nets and Crisis Management Arrangements](https://www.imf.org/en/publications/cr/issues/2016/12/31/el-salvador-technical-note-on-safety-nets-and-crisis-management-arrangements-41327)

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## Bibliographic details
- Published: February 11, 2014
- Series: IMF Staff Country Reports
- DOI: https://doi.org/10.5089/9781475588118.002

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### Overview and main findings
- The Technical Note assesses safety nets and crisis management arrangements in El Salvador.
- The bank safety net—emergency liquidity assistance, resolution, and deposit insurance—faces particular challenges given that it operates in the context of official dollarization.
- To address systemic liquidity risk in the context of official dollarization, the Banco Central de Reservas should be provided with more powers and funds to provide emergency liquidity assistance to banks.
- The bank resolution plan has not been tested.
- The deposit insurance fund has insufficient funds.
- The authorities should consider making the necessary changes to the banking law to strengthen the resolution and depositor insurance frameworks, and should issue the necessary regulations and guidelines.

### Policy recommendations
- Provide the Banco Central de Reservas with more powers to provide emergency liquidity assistance to banks.
- Provide the Banco Central de Reservas with more funds to provide emergency liquidity assistance to banks.
- Strengthen the bank resolution plan and test it.
- Increase resources or reform the deposit insurance fund to address its insufficiency.
- Amend the banking law to strengthen resolution and depositor insurance frameworks.
- Issue the necessary regulations and guidelines to support the strengthened frameworks.

### Subjects and keywords (as listed)
- Subjects: Asset and liability management; Bank resolution; Bank resolution framework; Banking; Deposit insurance; Financial crises; Financial regulation and supervision; Legal support in revenue administration; Liquidity; Liquidity risk; Revenue administration
- Keywords: Banco Central de Reservas; bank; Bank resolution; Bank resolution framework; banking law; BCR representative; board of directors; bridge bank; CR; deposit; deposit insurance; financial institution; Global; illiquid bank; insurance reserve; insurer to a bank resolution process; ISCR; Legal support in revenue administration; Liquidity; Liquidity risk; parent bank; resolution process

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_Source: https://www.imf.org/en/publications/cr/issues/2016/12/31/el-salvador-technical-note-on-safety-nets-and-crisis-management-arrangements-41327_