Cabo Verde: Technical Assistance Report-Review and Operationalization of the Resolution Framework
Technical Assistance Reports, March 14, 2025
Source details
- Canonical URL
- Cabo Verde: Technical Assistance Report-Review and Operationalization of the Resolution Framework
Other formats
Bibliographic details
- Published: March 14, 2025
- Series: Technical Assistance Reports
- DOI: https://doi.org/10.5089/9798229003322.019
Executive summary and assessment
- The IMF provided technical assistance to Banco Cabo Verde (BCV) on reforming and operationalizing its bank resolution framework.
- Cabo Verde's special resolution regime (SRR) has been in place since 2014.
- The SRR has been applied once, in 2017, for a non-systemic publicly owned bank.
- The SRR falls short of international best practices: limited resolution tools and inadequate safeguards to protect creditors' rights create legal uncertainties.
- Operationalization is hindered by staffing and governance constraints, including only one full-time staff member dedicated to the resolution function and a lack of operational independence.
Key findings
- Legal and toolset gaps:
- Limited resolution tools under the current SRR.
- Inadequate safeguards to protect creditors' rights, resulting in legal uncertainties.
- Current legal limitations appear to restrict BCV’s ability to prepare and execute resolution plans.
- Organizational and governance weaknesses:
- Only one full-time staff member is dedicated to the resolution function.
- Lack of operational independence for the resolution function within BCV.
- The resolution function is combined with BCV’s macroprudential function, undermining clarity and effectiveness.
- Operational preparedness:
- Resolution planning is weak and constrained by legal limitations.
- Crisis preparedness is underdeveloped; no comprehensive resolution manual or regular crisis simulation exercises are in place.
IMF recommendations and policy actions
- Strengthen legal framework and resolution tools:
- Expand resolution tools available under the SRR.
- Strengthen the conditions for entry into resolution to align with international best practices.
- Clarify and enhance safeguards to protect creditors’ rights and reduce legal uncertainties.
- Restructure governance and staffing:
- Restructure the governance of the resolution function by separating it from BCV’s macroprudential function.
- Elevate the status of the resolution function within BCV to provide operational independence.
- Increase staffing dedicated to the resolution function beyond the current single full-time staff member.
- Enhance resolution planning and crisis preparedness:
- Empower BCV to develop comprehensive resolution plans.
- Develop a resolution manual to guide actions during resolution events.
- Initiate crisis simulation exercises to test preparedness and operational plans.
Subject areas and keywords covered
- Subject: Bank resolution, Bank resolution framework, Bridge bank, Crisis resolution, Distressed institutions, Financial crises, Financial institutions
- Keywords: Bank Resolution, Bank resolution framework, Bridge bank, Cabo Verde., Crisis Management, Crisis Preparedness, Crisis resolution, Crisis Simulations, Department mission, Distressed institutions, IMF executive director, IMF's Monetary, mission chief, mission's assessment, Recovery Planning, Resolution Manual, Resolution Planning, Resolution Tools, Southern Africa, Special Resolution Regime
Source: Cabo Verde: Technical Assistance Report-Review and Operationalization of the Resolution Framework (IMF).
Content in this bundle
- Review and Operationalization of the Resolution Framework