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The Sovereign-Bank Nexus in Sierra Leone: Implications for Financial Stability in the Post-COVID Era

In: Navigating Economic Storms and Emerging from Fragility

Author

Listed:
  • Jiren Zhang

    (People’s Bank of China)

  • Peter Mugisa

    (IMF)

Abstract

This chapter shows the links that banks in Sierra Leone have with the sovereign and how this has developed over time with potential consequences for the stability of the financial system. Recent developments related to the COVID-19 pandemic have led to increased holdings of government debt and hence direct exposure. There is still no fully operational financial safety net that would minimize the need for government intervention in case of problem banks. Additionally, already existing macroeconomic imbalances in the country may cause the sovereign to respond with fiscal adjustment that could also negatively impact bank performance. All these factors contribute to the sovereign-bank nexus which calls for policies to further enhance sovereign debt management, increase capital and liquidity buffers for banks, and strengthen the financial safety net.

Suggested Citation

  • Jiren Zhang & Peter Mugisa, 2026. "The Sovereign-Bank Nexus in Sierra Leone: Implications for Financial Stability in the Post-COVID Era," Springer Books, in: Rosalind Mowatt & Monique Newiak & Sukhwinder Singh (ed.), Navigating Economic Storms and Emerging from Fragility, chapter 0, pages 91-97, Springer.
    • Handle: RePEc:spr:sprchp:978-3-031-92147-6_8
    DOI: 10.1007/978-3-031-92147-6_8
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