PwC welcomes Kazakhstan's transition to a new bank resolution mechanism, which will reduce the use of public funds.

Álvaro Benzo, Partner at PwC, emphasized that bank resolution should not rely on public funds or taxpayers’ money. In this regard, Kazakhstan’s planned transition to the new mechanism is aimed at strengthening financial stability, protecting consumers, and ensuring a fair distribution of risks across the financial sector.

“Every participant in the financial market should benefit from the new resolution framework since it reinforces overall financial stability. There is a systemic gain: all banks – whether they are in distress, undergoing resolution, or operating normally – benefit from the stability of the financial system as a whole. The absence of proper crisis management frameworks and safeguards would inevitably create problems for the entire financial system,” noted the expert.

Mr. Benzo also highlighted that the new resolution mechanism is designed to strongly reduce the use of state funds in case of a financial crisis.

“An ex-ante fund could in principle be a more robust tool for ensuring financial stability and addressing non-viable banks. However, the ex-post funding model proposed by the Agency – where contributions are made after a bank is declared failing or likely to fail – is a balanced approach that reduces the immediate burden on the banking system. In the current context, it represents a good compromise in terms of distributing financial costs and risks,” he added.

The expert also addressed the issue of regulatory responsibility, emphasizing that the role of financial regulators is to mitigate the effects of financial crises and prevent their negative impact on financial stability.

“If we tried to prevent every single potential financial crisis, we would have to place an enormous burden on the banking system in terms of supervision and capital requirements. If we aim for zero risk – avoiding any crisis – that would mean significantly increasing capital requirements, which in turn would impact credit flows into the economy,” concluded the PwC representative.

Source : https://www.gov.kz/memleket/entities/ardfm/press/news/details/1097875?lang=kk