The Bank for International Settlements' Financial Stability Institute (FSI) published an Occasional Paper reporting on a cross-border crisis simulation exercise involving authorities in Morocco, Mauritania, Tunisia and the West African Monetary Union, and set out targeted recommendations to strengthen crisis management and bank resolution arrangements. The exercise tested participants’ readiness to manage the simulated failure of a fictional regionally systemic cross-border banking group with critical functions in each jurisdiction. The scenario followed the escalating distress and failure of “Banque Soleil”, a Morocco-headquartered group operating through subsidiaries across the participating jurisdictions, and was run in three rounds covering early intervention, liquidity support and preparations for resolution, and decisions on resolution strategy. Key findings included generally fluid and cooperative cross-border communication led by the home authorities, but with early interactions focused mainly on information-sharing rather than forward-looking coordination on a group-wide strategy; limited consideration by many host authorities of shared-services operational continuity risks; gaps in structured protocols and playbooks for both cross-border and domestic inter-agency coordination; and differing national resolution tools, timelines and funding approaches that hindered agreement on a coordinated group solution and contributed to reliance on national measures, often involving public funds or guarantees. The report also observed that early intervention was often judgment-led with limited use of indicators or documented escalation procedures, while emergency liquidity assistance processes were generally well defined where frameworks existed. Recommendations cover reviewing resolution frameworks and tools with reference to the Financial Stability Board’s Key Attributes, improving operational readiness (including procedures for tools such as bail-in and transfer transactions and clarity on creditor hierarchy and funding arrangements), formalising conditions and procedures for any use of public funds, strengthening crisis management governance and communication playbooks, advancing bank-specific recovery and resolution planning (including cross-border coordination in resolution planning), and conducting regular tabletop and simulation exercises, with cross-authority simulations suggested every three to five years depending on needs and resources.
Bank for International Settlements - Financial Stability Institute 2025-10-13
Bank for International Settlements' Financial Stability Institute publishes recommendations after Northwest Africa cross-border bank failure simulation
The Bank for International Settlements’ Financial Stability Institute published an Occasional Paper on a cross-border crisis simulation involving authorities in Morocco, Mauritania, Tunisia and the West African Monetary Union, assessing their readiness to manage the failure of a fictional regionally systemic cross-border banking group. The exercise highlighted gaps in cross-border coordination, operational continuity planning, crisis protocols and alignment of resolution tools and funding, and found early intervention largely judgment-based. The paper recommends enhancing resolution frameworks in line with the Financial Stability Board’s Key Attributes, improving operational readiness and governance, formalising any use of public funds, strengthening recovery and resolution planning, and conducting regular crisis simulations.