Dar es Salaam on financial stability drive

Prof Ndulu
Financial institutions have been advised to draw up their own disaster backup plans in case of monetary crises instead of relying on taxpayers money to bail them out.

The move is among strategies aimed to facilitate financial stability and economic resilience in the country, Tanzania Financial Stability Forum (TFSF) was told in Dar es Salaam on Monday.

The newly launched TFSF would solidify and co-ordinate the country's monetary system from banking, security markets, insurance, pension funds and consumer credit schemes.

Four financial regulatory authorities which are the Bank of Tanzania (BoT), the Capital Markets and Securities Authority (CMSA), Tanzania Insurance Regulatory Authority (TIRA) and Deposit Insurance Board (DIB) signed the launch of TFTF which serves as inter-sectorial co-ordinator.

The regulators on the forum, according to the BoT Governor, Prof Benno Ndulu, would share out information after carrying micro prudential oversight to monitor and issue early warnings to save the economy from going into doldrums.

"The forum is supposed to develop integrity and safeguard the  financial sector using market-based solutions that will act as buffers for the unforeseen shocks.

"Though the forum will not guarantee a fully pre-crisis solution but is going to provide a bail-in and bail-out framework to prevent using taxpayers' money for collapsing firms and draw a national financial inclusion plan," Prof Ndulu noted.

He said at the moment the central bank issues financial stability reports for commercial banks and financial institutions supervised by BoT, but cannot create a wall to protect it from crises of other sectors. 

The banking sector, he said, controls between 70 and 75 per cent of total financial assets, but the rest are shared between insurance and pension funds.

The chief guest, Deputy Minister for Finance and Economic Affairs, Ms Janet Mmbene, said the launch came at the right time considering the challenges that the global and national financial systems face.
Source: The Daily News, www.dailynews.co.tz, reported by Abduel Elinaza in Dar es Salaam
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