Agency for Regulation and Development of the Financial Market of the Republic of Kazakhstan proposes ex-post bank insolvency funding to curb use of public money

PwC Kazakhstan partner Alvaro Benzo assessed the Agency for Regulation and Development of the Financial Market of the Republic of Kazakhstan’s planned shift to a new bank regulation mechanism designed to reduce reliance on government or taxpayer funds in a financial crisis, while supporting financial stability, consumer protection and a fairer allocation of risks across the financial sector. The comments highlighted the Agency’s proposed ex-post financing model, under which contributions would be paid after a bank is declared insolvent, as a balanced approach that lowers the direct burden on the banking system compared with an ex-ante pre-funded mechanism. Benzo also argued that aiming to predict and prevent every potential crisis could lead to excessive supervisory and capital requirements, and that materially higher capital requirements could restrict banks’ capacity to lend to the economy.