Cover IMF Working Papers
South Africa: The Financial Sector-Sovereign Nexus
Author: Mr. Heiko Hesse and Mr. Ken Miyajima
Series:
IMF Working Papers
Volume/Issue:
Volume 2022: Issue 051
Language:
English
Publication Date:
04 Mar 2022
DOI:
https://doi.org/10.5089/9798400204418.001
ISBN:
9798400204418
ISSN:
1018-5941
Pages:
21
Keywords:
South Africa; Financial Sector; Sovereign Debt; Bank-Sovereign Nexus; Home Bias; Financial Stability; Banking Risk; Sovereign Risk; Capital Flows; Bank Regulation; nonresident holding; holdings of Government Securities; banking risk; holdings of government securities; investor Base; nonbank financials; Sovereign bonds; Government securities; Domestic debt; Credit risk; Africa; Global
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IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.
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Globally, financial institutions have increased their holdings of domestic sovereign debt, tightening the linkage between the health of the financial system and the level of sovereign debt, or the “financial sector-sovereign nexus,” during the ongoing COVID-19 pandemic. In South Africa, the nexus is still relatively moderate, albeit rising, and the increased focus of the Prudential Authority on the associated risks provide reassurance. Options to mitigate such risks through the use of regulatory measures can be explored. However, absent the necessary fiscal consolidation and structural reforms, risks from the nexus to both the financial system and the sovereign will increase.
Cover IMF Working Papers
IMF Working Papers
ISSN:
1018-5941
Publisher:
International Monetary Fund