Bank of Botswana Governor Moses Pelaelo has revealed that the spillover effects of the banking turmoil in the United States of America to Botswana has been mitigated.
A banking crisis erupted in the US about two months ago following the collapsing of some small- to mid-size U.S. banks which triggered a sharp decline in global bank stock prices and swift response by regulators to prevent potential global contagion.
Following the crisis there have been fears that there may be spillover effects in foreign exchange and for companies looking to raise capital in Africa.
Speaking at the Financial Stability Board Regional Consultative Group (FSB RCG) of Sub-Saharan Africa meeting in Kasane this week, Pelaelo assured that spillover effects have been mitigated because Botswana continue to have a very strong banking system. The governor however said as the global economy is slowing down this can affect trade for Botswana and also affect other aspects of its economy.
Pelaelo appreciated that the FSB RCG of Sub-Saharan Africa two day-long meeting gave Botswana an opportunity to be current with respect to global developments in terms of financial markets, financial sector and the economy.
“Through this meeting we also reflected on the emerging issues in terms of the global economy, financial developments particularly the banking turmoil in the US and how they can impact the Botswana financial system,” he said.
He further stated that during the meeting they discussed the crypto assets and their likely impacts on the global stability and how they can be regulated. Pelaelo stressed that the discussions are important particularly looking at areas such as Bitcoin and how they can be viewed from an investment perspective.
“We will end up with various issues that can affect global financial stability, regional stability and one of those issues is the grey listing of South Africa and its likely spill over effects on Botswana’s economy,” Pelaelo noted.
He further added that the meeting takes place at a time when risks to global financial stability are elevated due to the rocky global economic recovery amid on-going prolonged war in Ukraine and persistent post-COVID production and supply constraints.
Pelaelo stated that the resultant high inflation in many parts of the world, tight global financial conditions, as well as risks of geo-economic fragmentation present real challenges.
