Financial market stability and capital market development
GIZ supports emerging and developing countries in establishing regulated and crisis-resistant financial systems.
Stable and functioning financial systems are essential for economic development. The financial crisis of 2007 clearly showed that this premise is not restricted to industrialised nations. Emerging and developing countries are especially susceptible to crises. They need support to create the regulatory framework required for responsible and effective financial systems.
As the foundation for smooth financial transactions, it is important that regulatory and supervisory mechanisms are either set up or adapted.
Practical examples of GIZ’s work in this field include advising the central banks of Egypt and the Republic of Kosovo. They receive support in adapting their banking supervision to EU requirements and international standards in order to make the financial sector stronger and more resistant to crises. Weaknesses in the financial systems are identified and deficits systematically remedied. EU-compatible, financial-sector standards are applied in pilot projects, after which the central banks receive support in introducing these standards with the help of local financial institutions.
GIZ organises training seminars and workshops, and strengthens the capacities of its local partners. Regular conferences are also held with local banking associations and financial institutions and with international regulatory authorities such as the European Central Bank, the Deutsche Bundesbank and the German Federal Financial Supervisory Authority.
GIZ’s activities encompass financial market regulation and supervision, financial market infrastructure and capital market development:
- GIZ advises central banks and supervisory authorities on introducing banking sector regulations that satisfy international standards and aim first and foremost to strengthen the equity and liquidity of these institutions. A further aim is to enable banks to undertake risk management activities, as a result of which external factors such as environmental and climate-related risks are taken into account in investment decisions.
- GIZ supports its partner countries in establishing payment systems, savings deposits, credit reporting agencies, deposit protection systems, apex organisations and training institutions to strengthen financial infrastructure and ensure access to financial services.
- GIZ advises central banks, ministries and supervisory authorities on establishing the political framework required to strengthen national capital markets.