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The Financial Stability unit promotes the sustainable development of banking institutions in client countries through Technical Assistance (TA) programs and through our joint Financial Sector Assessment Program (FSAP) with the International Monetary Fund (IMF). Our efforts are generally focused on promoting the alignment of regulatory and supervisory frameworks with international best practices and standards. Our work is also deeply integrated with global standard-setting bodies, where one of our core goals is to present the perspectives and experiences of emerging market and developing economies (EMDEs), which tend to be under-represented in international fora. The unit coordinates the WB engagement with the Financial Stability Board (FSB).

What We Do

The Banking Regulation, Supervision and Crisis Management business line helps client governments and the global community in strengthening financial-sector oversight and crisis preparedness/crisis management; promotes an enabling environment for bank intermediation; and enhances the capacity of the authorities to deal with financial stress.  We do this primarily through supporting the establishment of a well-functioning banking sector and effective bank-regulation, supervision and resolution frameworks.  

Financial Sector Diagnostics 

The team undertakes assessments, develops diagnostic tools, and provides appropriate policy responses to World Bank client countries in attempt to promote enduring financial stability. The FSAP provides a comprehensive framework through which assessors can identify financial system vulnerabilities and develop appropriate policy responses, including the implementation of international standards on banking supervision, anti-money laundering and combating the financing of terrorism (AML/CFT), deposit insurance, corporate governance, and non-performing loan resolution.  We also contribute to the design, assessment, implementation, and impact monitoring of international standards on banking supervision, deposit insurance and resolution in coordination with the IMF, the Financial Stability Board (FSB) and various standard-setting bodies. The Financial Stability unit also provides technical assistance to member jurisdictions through crisis-preparedness simulations.

Technical Assistance 

The Financial Stability team has delivered technical assistance programs that develop safety net mechanisms for lasting financial resilience, including risk management and crisis preparedness, financial-sector monitoring, bank regulatory and supervisory capacity, macroprudential framework design, state-owned bank reform, and deposit-insurance programs. TA programs often follow or build on the results of a country’s FSAP. For example, assessments of compliance with the Basel Core Principles for Effective Banking Supervision (BCP) have led to TA programs that are aimed at aligning regulatory and supervisory frameworks with global standards. Specifically, FSAPs have resulted in TA programs designed to improve specific regulations, improve risk management systems in banks, and adopt risk-based supervision, among others. We also support authorities in developing and implementing comprehensive restructurings of their countries’ banking sector, mostly in the context of our lending operations.

Green Finance

The team provides diagnostics and advisory services to regulators and financial policy makers on the impacts of climate change and related environmental risks on financial sectors, including a pilot assessment module already conducted for the financial sector risks and opportunities associated with climate change as part of the FSAP. This module provides a set of recommendations to regulators and policymakers on how to better manage climate and environmentally-related financial risks, as well as how to address barriers for green finance. We also provide technical support to regulators to design and implement supervisory approaches and tools to assess, manage, and mitigate climate and environmental risks. The team also engages with central banks and contributes to the Network for Greening the Financial System and the Sustainable Banking Network in order to further develop and share knowledge with the relevant policy community.

Knowledge Development

The team conducts important knowledge development projects on the impacts of de-risking and fintech, respectively, including several recent studies on the former: Withdrawal from Correspondent Banking; Where, Why, and What to Do About It and Study on the Macroeconomic Impacts of The Decline in Correspondent Banking Services. These studies provided important insights about the extent and drivers of de-risking, showing the deficiencies in customer due diligence and other AML/CFT controls in correspondent institutions and the AML/CFT supervision in these countries are among the main concerns of international correspondent banks. The Study on the Macroeconomic Impacts of The Decline in Correspondent Banking Services, conducted in 2018, is based on 8 country case studies from Latin America and the Caribbean, Sub-Saharan Africa, East Asia, and South Asia—all of which have expressed concerns over de-risking.


About 155 countries have participated in the FSAP Program, and more than 300 FSAPs have been conducted since the inception of the program in 1999. This has helped client counties identify vulnerabilities in their financial systems and develop appropriate policy responses.

The World Bank is a leader in delivering crisis-simulation exercises: more than 30 have been conducted since 2009. They can be used to establish procedures for dealing with existing threats, like bank failure, or emerging threats, like disruptive cyber incidents.

Who We Work With

In our client countries, we work with financial-sector authorities, central banks, supervisory and regulatory authorities, deposit-insurance authorities, Finance Ministries, and regional development banks and regulatory agencies. Globally, we work with multilateral organizations to develop global standards and best practices for financial systems, including the FSB, the IMF, the Basel Committee on Banking Supervision, the Financial Action Task Force, the International Organization of Securities Commissions, and the International Association of Deposit Insurers

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