Botswana: Financial Sector Assessment Program-Technical Note on Financial Sector Safety Nets, Crisis Management, and Bank Resolution Framework

This technical note highlights financial sector safety nets (FSN), crisis management, and bank resolution framework in Botswana. The financial safety net framework in Botswana is incomplete, while crisis preparedness and management structures must be expanded. The authorities are, however, poised to significantly improve the FSN and Crisis Management framework. Implementing a suitable law for the Deposit Insurance Scheme of Botswana and preparing the action plan for its operationalization, including clear funding arrangements through bank contributions and a public backstop, are needed. Developing the safety nets that characterize good international practices in the financial regulatory architecture will require the Financial Stability Council (FSC) to prioritize work over the near- to medium-term. The FSC should be expanded to include a crisis preparedness and management mandate, which is in line with its statutory responsibilities outlined in the Bank of Botswana Amendment Act, 2022. The FSC would oversee high-level monitoring of the financial system, analyzing the risks affecting the system, and discussing the appropriate policies to mitigate those risks. The FSC should also formally introduce system-wide crisis management protocols to plan and implement solutions in the event of a crisis.