{
  "title": "Botswana: Financial Sector Assessment Program-Technical Note on Assessment of Systemic Risks and Vulnerabilities for Banks",
  "publication": "IMF Staff Country Reports, March 5, 2024",
  "sourceUrl": "https://www.imf.org/en/publications/cr/issues/2024/03/05/botswana-financial-sector-assessment-program-technical-note-on-assessment-of-systemic-risks-545519",
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  "summary": "This technical note discusses assessment of systemic risks and vulnerabilities for banks in Botswana. The systemic risk analysis was conducted in the aftermath of the coronavirus disease 2019 pandemic.",
  "sections": [
    {
      "heading": "Overview",
      "content": "- Technical note assessing systemic risks and vulnerabilities for banks in Botswana conducted in the aftermath of the coronavirus disease 2019 pandemic.\n- Assessment based on stress tests that simulate bank health under a severe yet plausible adverse scenario including global and domestic inflationary pressures, monetary policy tightness, and a major slowdown of economic activity."
    },
    {
      "heading": "Stress test scenario and assumptions",
      "content": "- Scenario elements:\n  - Global and domestic inflationary pressures.\n  - Monetary policy tightness.\n  - A major slowdown of economic activity.\n- Purpose: to evaluate resilience of banks under severe but plausible macro-financial stresses."
    },
    {
      "heading": "Coverage and methodology",
      "content": "- Coverage:\n  - The exercises covered eight commercial banks as of June 2022.\n- Types of stress test exercises performed:\n  - Top-down solvency stress test.\n  - Liquidity stress test.\n  - Contagion and interconnectedness stress test (focused on domestic banking interconnectedness)."
    },
    {
      "heading": "Key findings and statistics",
      "content": "- Overall assessment:\n  - The financial system appears resilient to a wide range of shocks.\n- Solvency results:\n  - Solvency stress tests identify small capital shortfalls in two banks under the adverse scenario.\n- Liquidity and contagion:\n  - A dedicated liquidity stress test was performed.\n  - Contagion and interconnectedness stress test focused on domestic banking interconnectedness."
    },
    {
      "heading": "Policy recommendations",
      "content": "- Recommended actions for the Bank of Botswana:\n  - Introduce macro and micro level stress tests based on a multiperiod scenario analysis.\n  - Develop its framework to assess interest rate risk in the banking book.\n\nSource: IMF Staff Country Report — \"Botswana: Financial Sector Assessment Program-Technical Note on Assessment of Systemic Risks and Vulnerabilities for Banks\" (March 5, 2024).\n\n---\n\n Content in this bundle\n\n- 1bwaea2024005 - Executive Summary\n  - 1bwaea2024005 - Executive Summary (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - 1bwaea2024005 - Executive Summary (PDF){rel=\"external\" type=\"application/pdf\"}"
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    "[Structured JSON version](/en/publications/cr/issues/2024/03/05/botswana-financial-sector-assessment-program-technical-note-on-assessment-of-systemic-risks-545519/index.json)",
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    "Published: March 5, 2024",
    "Series: IMF Staff Country Reports",
    "DOI: https://doi.org/10.5089/9798400268199.002",
    "Technical note assessing systemic risks and vulnerabilities for banks in Botswana conducted in the aftermath of the coronavirus disease 2019 pandemic.",
    "Assessment based on stress tests that simulate bank health under a severe yet plausible adverse scenario including global and domestic inflationary pressures, monetary policy tightness, and a major slowdown of economic activity.",
    "Scenario elements:",
    "Purpose: to evaluate resilience of banks under severe but plausible macro-financial stresses.",
    "Coverage:",
    "Types of stress test exercises performed:",
    "Overall assessment:",
    "Solvency results:",
    "Liquidity and contagion:",
    "Recommended actions for the Bank of Botswana:",
    "**1bwaea2024005 - Executive Summary**"
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