Working from the same page

• Author: Jeremy Clift
• Position: IMF External Relations Department
• Pages: 364

Page 364

To help governments and international institutions work from the same page in assessing financial sector vulnerabilities, the IMF and the World Bank have recently published a new manual, Financial Sector Assessment: A Handbook.

The 480-page book details the general analytical framework, as well as specific techniques and methodologies, used in assessing the needs of financial systems in individual countries for their overall stability and development.

The Asian crisis of 1997-98 drove home the message that a strong and well-regulated financial sector is crucial in a globalized economy.

Partly in response, the IMF and the World Bank launched their Financial Sector Assessment Program (FSAP) in 1999. The FSAP aims to alert national authorities to vulnerabilities in their financial sectors-whether originating inside or outside the country-and to assist them in designing measures that reduce these vulnerabilities. Since 1999, the IMF and the World Bank have jointly conducted financial sector assessments for more than 100 countries to pinpoint weaknesses and identify how national systems can be improved.

Governments are also acutely aware that financial sector instability can have serious repercussions for the entire economy, and they have become increasingly interested in undertaking these assessments themselves. Building on the FSAP and other country work, and to aid governments that may want to set up their own monitoring processes for the financial sector, the IMF and the World Bank compiled the assessment handbook to meet the demand for information about sound practices in evaluating financial systems.

"Although the handbook draws substantially on World Bank and IMF experience with the FSAP and from policy and operational work in both institutions, it is designed for use in financial sector assessments, whether conducted by country authorities themselves or by World Bank and IMF teams," says Martin Cihak, an IMF economist who helped produce the handbook...