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International Monetary Fund. African Dept.
The limited development of markets in the region represents a key risk factor for financial stability. 1 Since the previous Financial Sector Assessment Program (FSAP) in 2008, the bank deposit base has increased from 18 percent to 30 percent of gross domestic product (GDP) and the buoyancy of the government securities market has benefited from the interruption of public deficit financing by the Central Bank of West African States (BCEAO). Nevertheless, a significant portion of bank funding cannot be considered stable, due to the concentration of deposits held by large corporations. Apart from reserves held with the BCEAO, banks have little in the way of liquid assets, although the secondary market for government securities is beginning to grow for some issuers. Insufficient secondary market liquidity and the prevalence of unsecured intragroup transactions (60 percent of the total) in the interbank market exacerbate the risk and extent of potential losses for banks in the event of liquidity distress.
International Monetary Fund. African Dept.

Requirement B. Liquidity Ratios CENTRAL BANK LIQUIDITY INTERVENTIONS A. Monetary Policy Operations B. Emergency Liquidity: Instrument and Risk Control Measures BCEAO RISK CONTROL MEASURES A. Funding Plans B. Collateral Framework C. Risk Control Measures within the Emergency Liquidity Framework FIGURES 1. Potentially Liquid Assets in the WAEMU 2. Liquidity Indicators of Government Securities (2019–21) 3. Customer Funding Stability Indicators 4. Top 5th Percentile of Withdrawals by Bank 5. Interbank Transactions 6. Development of the Network of

International Monetary Fund. African Dept.

Table 3 and Figure 3 . The picture that emerges from these indicators is one of a system in which banks are exposed to the withdrawal of their largest depositors and in which relatively large corporate deposits dominate. There is also a wide disparity in the composition of customer funding across banks, suggesting that some institutions may be exposed to significant liquidity pressures. Table 3. WAEMU: Description of Customer Funding Stability Indicators Indicators Assumptions Distribution of deposits by size Smaller deposits