Panama: Financial Sector Assessment Program - Technical Note on Financial Safety Net, Resolution, and Crisis Management

International Monetary Fund

No 2024/235, IMF Staff Country Reports from International Monetary Fund

Abstract: This paper presents a technical note on financial safety net, resolution, and crisis management in Panama. Key institutional pillars of a financial safety net have not been established in Panama. An explicit industry-funded deposit insurance system should be established as a key element of an effective financial sector safety net in Panama. Superintendency of Banks of Panama (SBP) is the resolution authority for banks in Panama; the SBP relies on strong prudential supervision to avoid bank failures and remove weak institutions. The current approach to bank resolution has not changed since the 2012 Financial Sector Assessment Program and recent technical assistance missions. The legal framework underpinning SBP corrective actions, its overall powers and approach to handling bank insolvency has not changed since passage of the Banking Law in 2008. Panamanian authorities have undertaken a review of the current resolution framework and have determined there is need for improvement. The authorities should build upon current domestic and regional efforts, and develop their internal, interagency, and cross-border coordination and communication mechanisms for bank resolution and crisis management.

Keywords: IMF-World Bank Financial Sector Assessment Program; Banco Nacional de Panamá; FSAP assessment's finding; staff team of the International Monetary Fund; deposit insurance system; Bank resolution framework; Bank resolution; Crisis resolution; Crisis management; Financial sector stability; Global; Central America (search for similar items in EconPapers)
Pages: 37
Date: 2024-07-19
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