Basel III in Sierra Leone: Delivering on it

Abstract

Basel III framework is employed to safeguard the banking sector stability in the international arena. Sierra Leone intends to employ Basel III framework for capital regulation in the banking ecosystem. This article attempts to stimulate discussions on policies to enable Basel III deliver on its goals in Sierra Leone. It elucidates on the significance and plausible strategies for implementing Basel III to facilitate delivery. Within this space the banking sector is anticipated to prop-up capital quality and quantity, propelling minimum liquidity requirement for banks, dampening systemic risks and enabling a smooth transition to Basel III Capital Framework. This study emphasizes a cooling-off period to adopting Basel III framework in Sierra Leone, a fine mix of micro and macro prudential regulations required to be deployed and ; the drive to fortify banks’ balance sheet in lieu of Basel III capital and liquidity framework adoption. This article recommends that the Sierra Leone’s Central Bank should boost market discipline and bolster effective and fficient supervision within the Basel perimeter. The need for cross-border supervision amongst domestics and foreign banks is more so portended. Furthermore, the Central Bank should also stand ready to always protect depositors’ funds and deploy crises management strategies including emergency liquidity support amongst others.