Bank of Botswana collaborates with ECA, Frontclear to ease interbank money market
The United Nations Economic Commission for Africa (ECA), in collaboration with the Bank of Botswana and Frontclear, has unveiled the Money Market Diagnostic Framework (MMDF) aimed at enhancing Botswana’s financial system.
This framework offers vital insights for the comprehensive development of the money and interbank market, identifying obstacles and presenting sequential recommendations.
The launch occurred during a workshop jointly organized by the ECA, Bank of Botswana, and Frontclear.
A Memorandum of Understanding (MOU) was signed between the Bank of Botswana and Frontclear, signifying their shared dedication to advancing the country’s money market, including fostering a more participatory interbank market and secondary bond market.
Kealeboga Masalila, Deputy Governor of the Bank of Botswana, highlighted the significance of a stable and inclusive money market for the growth of local currency bond markets.
Masalila emphasised the role of interbank lending as the core of the money market, addressing immediate liquidity concerns and facilitating the transmission of monetary policy changes.
Botswana, as an emerging market, faces challenges such as market segmentation and an over-reliance on the banking sector as the primary local liquidity source.
Legal and regulatory challenges, including the enforcement of global best practices in legal documentation, are also acknowledged.
Addressing these challenges is expected to enhance liquidity and broaden the domestic and international investor base.
The ultimate goal is to strengthen the soundness and resilience of the financial system, enabling banks to effectively channel savings into loans and financial products for the real economy.
Caster Moseki, Director of Financial Markets at the Bank of Botswana, expressed gratitude for the partnership with ECA and Frontclear, reiterating the central bank’s commitment to developing Botswana’s money market.
Jean-Marc Kilolo, Economic Affairs Officer at ECA, provided insights into the commission’s functions and ongoing efforts in helping African countries deepen their domestic financial markets.
Erik van Dijk and Ingrid Hagen from Frontclear delivered presentations on repo and swap transactions, outlining concepts, structures, benefits, mechanisms, and necessary documentation for the Money Market Diagnostic study.
Hamilton Thomas, Programme Officer Capital Market at the SADC Secretariat, presented the SADC Regional Policy Perspective on Financial Market development during the workshop.
The event drew representatives from the central bank, capital market authority, securities exchange, commercial banks, pension funds, and legal firms.
