## Key Banking System Risks in the WAEMU: WAEMU

_Selected Issues Papers, May 17, 2024_

## Source details

**Canonical URL:** [Key Banking System Risks in the WAEMU: WAEMU](https://www.imf.org/en/publications/selected-issues-papers/issues/2024/05/16/key-banking-system-risks-in-the-waemu-548985)

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## Bibliographic details
- Authors: Knarik Ayvazyan
- Published: May 17, 2024
- Series: Selected Issues Papers
- DOI: https://doi.org/10.5089/9798400275142.018

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### Executive summary
- The gradual alignment of prudential regulations on Basel II/III standards since 2018, as well as improvements in banking supervision and macroprudential surveillance, have contributed to the WAEMU’s banking system’s resilience to recent global and regional shocks.
- Cyclical vulnerabilities have been contained.
- Bank credit portfolios remain highly concentrated.
- Exposure to sovereign risks has grown substantially in recent years, together with liquidity risks.
- Further reforms building on those recently implemented in line with recommendations from the 2022 Financial Sector Assessment Program (FSAP) will help address such vulnerabilities.

### Key findings
- Regulatory alignment: Prudential regulations have been gradually aligned on Basel II/III standards since 2018.
- Supervisory improvements: Banking supervision and macroprudential surveillance have improved, contributing to resilience against recent shocks.
- Concentration risk: Bank credit portfolios remain highly concentrated.
- Sovereign risk: Exposure to sovereign risks has grown substantially in recent years.
- Liquidity risk: Liquidity risks have increased alongside sovereign exposure.
- Cyclical position: Cyclical vulnerabilities have been contained.

### Policy recommendations and reform priorities
- Build further reforms on those recently implemented in line with recommendations from the 2022 Financial Sector Assessment Program (FSAP).
- Enhance macroprudential policy’s effectiveness.
- Strengthen banking supervision frameworks.

### Subject areas and keywords
- Subject areas: Commercial banks; Financial institutions; Financial regulation and supervision; Financial sector policy and analysis; Government securities; International organization; Macroprudential policy; Market risk; Monetary policy; Securities.
- Keywords: bank credit portfolio; banking supervision framework; Banking System risk; banking system's resilience; banks; Commercial banks; credit gap; financial stability; Global; Government securities; Macroprudential policy; Market risk; risk; risks in the WAEMU; Securities; stress test; Sub-Saharan Africa; WAEMU.

*Selected Issues Paper No. 2024/014 — Pages: 30; Volume: 2024; Issue: 014; DOI: https://doi.org/10.5089/9798400275142.018; Stock No: SIPEA2024014; ISBN: 9798400275142; ISSN: 2958-7875*

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## Content in this bundle

- **Key Banking System Risks in the WAEMU; Selected Issues Paper No. 2024/014; March 1, 2024**
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_Source: https://www.imf.org/en/publications/selected-issues-papers/issues/2024/05/16/key-banking-system-risks-in-the-waemu-548985_