During a virtual meeting held on 10 June 2020, Cabinet approved the Financial Sector Laws Amendment Bill of 2020, for submission to Parliament. In the first step to formalising a resolution process for financially distressed banks, the Bill proposes to designate the SARB as the Resolution Authority, and enhances the SARB’s regulatory tools for discharging its statutory mandate of ensuring stability of the financial system.
The Bill introduces South Africa’s first comprehensive deposit insurance scheme to which all banks must contribute that will help to pay depositors their funds when a bank fails. Such a scheme will protect vulnerable depositors and ensure minimal disruptions to the financial system and broader economy when such institutions suffer financial distress.