Publication: Nepal Contingency Planning Project
Date
2010-10-31
ISSN
Published
2010-10-31
Author(s)
World Bank
Abstract
The Nepalese authorities have made
important progress in strengthening the financial stability
framework. This framework consists of provisions for
liquidity support to banks, supervisory practices, and
problem bank resolution mechanisms. Some liquidity
facilities have been put in place, supervisory actions
strengthened, and amendments to bank resolution laws have
been passed that improved the ability of the Nepalese
Government to manage the growing financial sector.
Notwithstanding this progress, some additional refinements
are warranted. The banking sector is growing rapidly, with
new entrants increasing the risk profile of the system. At
the same time, the economic conditions of the country are
less beneficial than in the past. Accordingly, some
strengthening of the existing framework is advisable. Areas
for strengthening include: preconditions for effective
crisis management; development of a crisis management
framework; and preparation of a step-by-step plan for
meeting the crisis. This report focuses on two aspects of
contingency planning. First, a number of structural reforms
are necessary to make the crisis management framework
efficient. These preconditions for an effective crisis
management framework may take time to implement but should
be initiated immediately. If a crisis were to emerge before
these reforms are completed, the crisis will be more
difficult to contain and resolve. Second, an Action Plan for
dealing with the unfolding crisis is proposed. While the
specifics will depend on the causes of the crisis and the
particular path the crisis takes, principles for addressing
the crisis will be discussed.
Citation
“World Bank. 2010. Nepal Contingency Planning Project. © Washington, DC. http://openknowledge.worldbank.org/entities/publication/dfac49e2-3403-58a5-826c-0cc31045baca License: CC BY 3.0 IGO.”