Financial systems development

Regulation and supervision

Market-woman in Onankali, Namibia.

A stable financial system is a precondition for sound economic growth. National, regional and in­ter­na­tional financial crises can entail massive costs for indi­vid­uals, businesses and the state, and thus bring with them serious risks to national economies. To help avoid crises of this sort, Germany supports the efforts of co­op­er­a­tion coun­tries to stabilise their financial systems with the help of modern instru­ments and measures to hedge risks. The focus is on strengthening supervisory and regulatory structures for the commercial banking system.

The central banks and supervisory authorities face the challenge of finding the right balance between financial stability and expanding financial services. Regulation must allow for innovation, like mobile-phone-based financial services, while at the same time precluding risks such as the irresponsible awarding of loans.

At gov­ern­ment level, German support comprises delivering advisory services to co­op­er­a­tion coun­tries on the regulation of their financial sector and the super­vision of both the banking system and the insurance sector. Over and above this, Germany is actively involved in delivering advisory services on macroeconomic reform, including monetary and currency policy. German de­vel­op­ment co­op­er­a­tion is also strengthening the establishment of deposit-guarantee systems to protect savings and preserve confidence in local markets.

BMZ glossary

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