Financial stability 2016 Report

Financial stability has become a major global concern. The prime reasons for this concern are the increasing number of financial crises from the late 1980s to the present, especially the successive crises in Asia, Latin America and the global crisis today as well as their financial and socio-economic costs. The increasing interconnection of the various components of the financial system and the fast pace of financial innovation have increased the risks and the magnitude of their repercussions. Beyond their repercussions, the succession of increasingly severe crises raises the problem on the one hand of the institutional mechanism or the body in charge of maintaining the stability of the financial system and, on the other hand, the methods to be used to assess its soundness and that of its main components (financial institutions, capital markets, payments systems and legal and regulatory frameworks). Indeed, modern financial systems are composed of several segments (banks, insurance companies, stock exchanges, amongst others), each of which traditionally has a specific supervisory and regulatory authority. Given the growing interdependence and interconnection of these different segments, the question of the effectiveness of such architecture clearly arises with regard to the problem of the stability of the global financial system.

All of these issues of global concern, are also critical for ECOWAS Member States, where financial stability is essential for monetary and economic integration. This report mainly focuses on key financial sector developments (banking, microfinance, insurance and capital markets) in ECOWAS as well as the Financial Soundness Indicators (FSIs) relating to Capital Adequacy, Asset Quality, Earnings and Profitability and Liquidity.

The rest of the report is organized as follows: Following this introductory section, section 1 highlights the global financial developments; Section II deals with financial sector developments in ECOWAS. Section III contains a highlight of the status of financial stability in ECOWAS Member States. The report ends with conclusion and recommendations.