Africa-Press – Eswatini. The Central Bank of Eswatini has sought to reform its enabling and regulatory framework for banks.
This is in line with the bank’s strategic initiatives, and is an alignment aimed at harmonising the legal and operation frameworks of central banks. In that regard, a review of certain Bills has been undertaken. According to the CBE 50th anniversary book, these Bills are: The Financial Institutions Bill, Central Bank Bill and the Financial Stability Bill. The Financial Institutions Bill 2024 seeks to review and introduce changes in the existing Financial Institutions Act 2005 to consolidate and align the country’s laws on central banking with regional and international best practices. The Bill seeks to provide for the regulation and supervision of deposit-taking matters incidental.
The proposed Bill seeks to achieve and/or provide for the following:
* Amend the licensing criteria and requirements for revocation of licences provisions.
* Extend the bank’s supervisory autonomy.
* Amend the regime for capital adequacy and liquidity requirements in line with the Basel Standards.
* Extend the provisions on information exchange and provide for a framework for consolidated supervision between authorities.
* Amend the regime for enforcement, early intervention and resolution.
* Introduce and prescribe for Islamic banking operations that follow Shariah Law principles.
* Introduce and establish a Deposit Protection Fund.
* Introduce an explicit mandate and framework for market conduct and consumer protection supervision.
* Establish the Financial Institutions Appeals Tribunal.
Then the Financial Stability Bill 2024 seeks to enhance the bank’s macroprudential functions by establishing it as a macroprudential authority through various mechanisms that aim to mitigate risks to the country’s financial systems. It further seeks to address the absence of a clearly defined legislative framework that deals with coordination and effective management resolution of a financial crisis. The Bill empowers the bank to put in place various quantitative macroprudential instruments that include, but are not limited to:
* Caps on credit growth;
* Sectoral capital requirements;
* Loan-to-value ratios;
* Liquidity tools;
* Debt-service-income ratios.
The Bill will also ensure that there are clearly defined processes for managing a financial crisis event, which include ensuring the existence of institutional arrangements between safety-net players i.e., the bank, Finencial Service Regulatory Authority (FSRA) and other players on how to manage and/or resolve a crisis. Furthermore, the Central Bank of Eswatini Bill 2024 seeks to cover, comprehensively, all aspects of modern central banking. The Central Bank of Eswatini has continuously adapted its strategies to changing economic conditions. While its core mission of price stability, financial stability and economic growth remains consistent, the method used to achieve these goals had evolved. This is particularly true with the recent rise of new payment technologies.
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