The Financial Stability Council comprises the leadership of the Ministry of Finance and Economic Development (MFED), the Bank of Botswana (the Bank), Non-Bank Financial Institutions Regulatory Authority (NBFIRA), and Financial Intelligence Agency (FIA), institutions that are involved in developing legislation and regulations, policymaking and supervision with respect to the whole or facets of the financial sector.
The aforementioned institutions have unique statutory mandates, objectives, oversight frameworks and operational spheres, albeit mostly related. It therefore imperative to make it clear that establishment of the Financial Stability Council is not to usurp or dilute the role of the respective institutions, which is neither feasible nor desirable. Rather it is to share information and where, desirable, facilitate collective and coordinated approach to financial sector monitoring frameworks and crisis resolution. This coordinated oversight is necessary because while the relevant institutions are distinctly and individually supervised at a micro level, the financial system encompasses interconnected relationships and activities and is subject to common and transferable risks. Therefore, the Council is designed to foster collaboration and coordination in the four areas of: sharing of data and information for purposes of monitoring and risk assessment; overseeing and guiding macro-prudential policy framework and implementation; regular briefings, consultations and policy review with respect to relevant developments; and structured and coordinated response to any financial system imbalances and resolution as may be necessary.
The signing of the Memorandum of Understanding by the respective institutions on February 26, 2019, represented an undertaking to collectively safeguard the continuing soundness and integrity of the financial system. It also facilitates the development of mechanisms and channels for sharing of data and consultation. The thought process for establishment of a Financial Stability Council also involves consideration of a robust legislative backing for the work of the Council and this will accordingly be facilitated in the revised Bank of Botswana Act; consultations between the Bank and MFED on the review are at an advanced stage.