## Panama: Financial Sector Assessment Program - Technical Note on Financial Safety Net, Resolution, and Crisis Management

_IMF Staff Country Reports, July 19, 2024_

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**Canonical URL:** [Panama: Financial Sector Assessment Program - Technical Note on Financial Safety Net, Resolution, and Crisis Management](https://www.imf.org/en/publications/cr/issues/2024/07/19/panama-financial-sector-assessment-program-technical-note-on-financial-safety-net-552158)

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## Bibliographic details
- Published: July 19, 2024
- Series: IMF Staff Country Reports
- DOI: https://doi.org/10.5089/9798400284830.002

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### Summary findings
- Key institutional pillars of a financial safety net have not been established in Panama.
- An explicit industry-funded deposit insurance system should be established as a key element of an effective financial sector safety net in Panama.
- Superintendency of Banks of Panama (SBP) is the resolution authority for banks in Panama; the SBP relies on strong prudential supervision to avoid bank failures and remove weak institutions.
- The current approach to bank resolution has not changed since the 2012 Financial Sector Assessment Program and recent technical assistance missions.
- The legal framework underpinning SBP corrective actions, its overall powers and approach to handling bank insolvency has not changed since passage of the Banking Law in 2008.
- Panamanian authorities have undertaken a review of the current resolution framework and have determined there is need for improvement.
- Authorities should build upon current domestic and regional efforts, and develop their internal, interagency, and cross-border coordination and communication mechanisms for bank resolution and crisis management.

### Policy recommendations and priorities
- Establish an explicit industry-funded deposit insurance system as a central component of the financial safety net.
- Strengthen internal, interagency, and cross-border coordination and communication mechanisms for bank resolution and crisis management.
- Build upon current domestic and regional efforts to improve the resolution framework.

### Institutional and legal context
- Resolution authority: Superintendency of Banks of Panama (SBP).
- Reliance on prudential supervision: SBP's approach prioritizes strong prudential supervision to prevent bank failures and to remove weak institutions.
- Legal framework status: No substantive change in the legal framework governing SBP corrective actions and handling of bank insolvency since the Banking Law in 2008.

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_Source: https://www.imf.org/en/publications/cr/issues/2024/07/19/panama-financial-sector-assessment-program-technical-note-on-financial-safety-net-552158_