Paraguay: Technical Assistance Report-Bank Resolution Framework and the Deposit Guarantee Fund

This paper discusses Paraguay’s Technical Assistance report on bank resolution framework and the deposit guarantee fund. The mission identified several areas where the existing deposit guarantee fund and bank resolution framework could be enhanced. The Central Bank of Paraguay should consider developing an ongoing process of recovery and resolution planning and underpin it in its regulatory framework, in line with international modern practices Coordination with members of the financial safety net of other jurisdictions is key to ensuring adequate crisis preparedness during normal times and enabling adequate coordination of crisis management measures if there are concerns about the viability of a foreign-owned bank with operations in Paraguay. A one-voice method of communication with the public should be considered, and advance preparation is paramount to ensure a smooth process for communications in the event of a crisis situation. The resolution framework should stipulate clear and expeditious access to temporary funding, based on financial stability considerations, in situations where private sector funding has been exhausted or cannot achieve resolution objectives.