Managing bank resolution in South Africa

Abstract

Asymmetric information, agency problems and the moral hazard, in their various manifestations, can be attributed to the collapse of financial systems over the last century. In order to guard against the negative externalities of these dilemmas, regulators in the banking sector have developed capital adequacy requirements, which measure the solvency of Banks. After the global financial crisis, regulators have realised the importance of having appropriate bank resolution regimes, in order to dismantle failing or failed banks before they become a risk to the financial system and economy. This report s analyses how the South African Reserve Bank resolves systematically significant banks.