Description:
This Note discusses the framework for banking resolution and crisis prevention and management in Samoa, and provides comments and recommendations for its improvement. As part of the Financial Sector Assessment Program for Samoa, this technical note evaluates the current legal powers and operational capabilities at the disposal of the financial sector authorities for confronting serious banking problems, and for crisis prevention and management. Comments and recommendations are provided, aimed at increasing the authorities’ capacity to address such problems in a way that minimizes damages to the financial system and reduces costs for the tax payer and for the economy as a whole. Key Findings and Recommendations The current regulatory framework to deal with financial institutions (FIs) should be reformed. The Central Bank of Samoa (CBS) has issued “Prudential Statements” containing some prudential rules, ratios and limits applicable to FIs, but there are no general standards for their enforcement, which is done on a purely discretional case-by-case basis. The powers from the Central Bank Act (CBA) are not strong enough to enable the CBS to take enforcement actions