Regulatory Alerts2018-02-15
Instruction No. 001-DOM/2018 on the Compliance with the Solvency Ratio by Participants Eligible for the Money Market
The Governor of Banky Foiben'i Madagasikara issues Instruction No. 001-DOM/2018, requiring credit institutions designated as "Eligible Participants" in the money market to maintain a prescribed solvency ratio. Non-compliant institutions face immediate, automatic suspension from money market trading beginning the first business day of month M+2, which is lifted upon demonstrated solvency regularization before month M+2 ends. During suspension, existing transactions mature and are settled as agreed, but the affected institutions are barred from executing new trades, with formal notification handled by the bank's monetary policy department.
[LOGO] BANKY FOIBEN'I MADAGASIKARA
DIRECTION OF MONETARY OPERATIONS
INSTRUCTION NO. 001-DOM/2018 on the Compliance with the Solvency Ratio by Participants Eligible for the Money Market
The Governor of Banky Foiben'i Madagasikara,
Having regard to Law No. 2016-004 of July 29, 2016, supplemented by Law No. 2016-057 of February 2, 2017 establishing the Statutes of the Central Bank of Madagascar,
Having regard to Decree No. 2014-1684 of October 29, 2014 on the appointment of the Governor of the Central Bank,
Having regard to Instruction No. 001/06-CSBF of October 13, 2006 on the solvency ratio of credit institutions,
Having regard to Instruction No. 005-DOM/17 of December 19, 2017 on the implementation of monetary policy instruments by Banky Foiben'i Madagasikara,
HEREBY DECIDES:
Article 1: Purpose
Pursuant to Article 2 of Instruction No. 005-DOM/17 of December 19, 2017 on the implementation of monetary policy instruments by Banky Foiben'i Madagasikara, credit institutions meeting, among other conditions, the solvency ratio prescribed by Instruction No. 001/06-CSBF of October 13, 2006, are declared "Eligible Participants".
This Instruction sets out the measures applicable to credit institutions in breach of this solvency ratio compliance requirement.
1 B.P. 550 Antananarivo (101) – Madagascar ■ Tel. (261) 20 22 217 51/ 20 22 234 65 ■ Fax (261) 20 22 345 32 E-mail: banque-centrale@bfm.mg ■ Website: www.banque-centrale.mg
Article 2: Duration of Suspension and Reinstatement of Money Market Participation
Based on information established by the General Secretariat of the CSBF, the suspension measure on the money market for credit institutions that fail to meet the minimum solvency ratio for month M applies immediately and automatically on the first business day of month M+2, and is lifted in the same manner on the last business day of that same month M+2.
Ongoing operations of credit institutions suspended from the money market are settled at agreed maturities, but these institutions are no longer authorized to negotiate new transactions.
Article 3: Bank Notifications
It is the responsibility of the Department in charge of the money market within BFM to notify, before the end of month M+1, the credit institution subject to money market suspension via a letter specifying the corresponding sanction period. Likewise, said Department informs the credit institution of the lifting of the sanction upon verification of its solvency regularization before the end of month M+2.
Article 4: Final Provisions
This Instruction enters into force as of February 15, 2018.
Antananarivo, February 15, 2018
[STAMP] THE GOVERNOR ALAIN H. RASOLOFONDRAIBE
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