WB to assess Bangladesh's debt resolution mechanism
Saturday, 15 May 2010
A Z M Anas
The World Bank (WB) will conduct a study on the strength of Bangladesh's debt resolution mechanism, officials said.
The assessment, to be conducted using the World Bank principles and guidelines, will review the effectiveness of insolvency and creditor rights laws and contribute to the economic health of the country by providing a safety valve in the event of financial distress.
"It's the first assessment of its kind in Bangladesh. We believe this study will put a new spotlight on the country's insolvency and creditor rights laws," a senior central bank official said.
The initiative comes after a request from the Bangladesh Bank to gauge the banking system's supervisory strength.
"The time is ripe for such an assessment. It will help the government amend banking and financial laws making those more effective," a World Bank official said Friday.
The official said the study would take at least three months to complete and when completed, it would be made public in consultation with the government and the central bank.
World Bank officials said the upcoming review was part of recommendations that came out of the 2010 financial sector assessment carried out by the World Bank.
"We've approached the World Bank to carry out the assessment for the first time in Bangladesh's history. We believe it's essential to conduct such assessment as the country navigates the post-recession economy," a central bank official said.
The programme will include the formulation of principles on insolvency and cred itor rights, assessment and technical assistance to clients and capacity building events.
Insolvency and creditor rights ("ICR") constitutes one of the 12 areas in which the joint World Bank and International Monetary Fund (IMF) Initiative on Standards and Codes undertakes assessments.
The World Bank and UNCITRAL (UN commission on international trade law), in consultation with the IMF, have prepared the Insolvency and Creditor Rights Standard for ICR ROSC (reports on the observance of standards and codes) assessments. The ICR Standard combines both the Principles and the Recommendations in one document.
The Principles were developed in 2001 in response to a request from the international community in the wake of the financial crisis in emerging markets in the late 1990s.
At that time, they constituted the first internationally recognised benchmarks to evaluate the effectiveness of domestic creditor rights and insolvency systems. In 2005 the Principles were revised.
Central bank officials said the Bangladesh Bank is "committed" to carrying forward the reform momentum launched under the multi-year Central Bank Strengthening Project (CBSP) funded by the WB.
"The Governor on Thursday wrote a letter to the Economic Relations Division (ERD) to open talks with the World Bank seeking more aid for sustaining the project," a BB official said.
The CBSP is scheduled to close in 2011, but the central bank feels it is necessary to continue it for more years because many reform agenda remain unfinished.
The Governor's letter also requested the ERD to include the reform at the central bank in the next Country Assistance Strategy under preparation by the World Bank.
The World Bank (WB) will conduct a study on the strength of Bangladesh's debt resolution mechanism, officials said.
The assessment, to be conducted using the World Bank principles and guidelines, will review the effectiveness of insolvency and creditor rights laws and contribute to the economic health of the country by providing a safety valve in the event of financial distress.
"It's the first assessment of its kind in Bangladesh. We believe this study will put a new spotlight on the country's insolvency and creditor rights laws," a senior central bank official said.
The initiative comes after a request from the Bangladesh Bank to gauge the banking system's supervisory strength.
"The time is ripe for such an assessment. It will help the government amend banking and financial laws making those more effective," a World Bank official said Friday.
The official said the study would take at least three months to complete and when completed, it would be made public in consultation with the government and the central bank.
World Bank officials said the upcoming review was part of recommendations that came out of the 2010 financial sector assessment carried out by the World Bank.
"We've approached the World Bank to carry out the assessment for the first time in Bangladesh's history. We believe it's essential to conduct such assessment as the country navigates the post-recession economy," a central bank official said.
The programme will include the formulation of principles on insolvency and cred itor rights, assessment and technical assistance to clients and capacity building events.
Insolvency and creditor rights ("ICR") constitutes one of the 12 areas in which the joint World Bank and International Monetary Fund (IMF) Initiative on Standards and Codes undertakes assessments.
The World Bank and UNCITRAL (UN commission on international trade law), in consultation with the IMF, have prepared the Insolvency and Creditor Rights Standard for ICR ROSC (reports on the observance of standards and codes) assessments. The ICR Standard combines both the Principles and the Recommendations in one document.
The Principles were developed in 2001 in response to a request from the international community in the wake of the financial crisis in emerging markets in the late 1990s.
At that time, they constituted the first internationally recognised benchmarks to evaluate the effectiveness of domestic creditor rights and insolvency systems. In 2005 the Principles were revised.
Central bank officials said the Bangladesh Bank is "committed" to carrying forward the reform momentum launched under the multi-year Central Bank Strengthening Project (CBSP) funded by the WB.
"The Governor on Thursday wrote a letter to the Economic Relations Division (ERD) to open talks with the World Bank seeking more aid for sustaining the project," a BB official said.
The CBSP is scheduled to close in 2011, but the central bank feels it is necessary to continue it for more years because many reform agenda remain unfinished.
The Governor's letter also requested the ERD to include the reform at the central bank in the next Country Assistance Strategy under preparation by the World Bank.