SARB emergency liquidity assistance (ELA) framework
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Individual Reform: SARB emergency liquidity assistance (ELA) framework 2026 - 2027

Strengthening liquidity support for banks through enhanced assessment and support mechanisms

No data available for the deliverable: Strengthening liquidity support for banks through enhanced assessment and support mechanisms

No data available for the deliverable: Strengthening liquidity support for banks through enhanced assessment and support mechanisms

No data available for the deliverable: Strengthening liquidity support for banks through enhanced assessment and support mechanisms

No data available for the deliverable: Strengthening liquidity support for banks through enhanced assessment and support mechanisms

No data available for the deliverable: Strengthening liquidity support for banks through enhanced assessment and support mechanisms

Summary

The revised emergency liquidity assistance (ELA) framework introduces new internal guidance, improved assessment protocols and operational enhancements, with further legal alignment in progress.

Canvas not supported.

Is it working?

The system is effective, with readiness and coordination much improved. Legal alignment is expected to be finalised by 2027. The ELA framework is regularly tested and updated to ensure ongoing effectiveness.

Actions

The framework is operational and has improved the SARB’s crisis response capacity, though some legal formalisation is still pending.

Are there plans?

New guidance and operational improvements have been implemented, with regular reviews and coordination between the SARB, Prudential Authority and National Treasury.

Is it on the agenda?

The ELA framework is a standing SARB priority, with ongoing upgrades in response to IMF and FSAP recommendations.

Goals

To enhance the SARB’s ability to provide timely liquidity support to banks during periods of stress, safeguarding financial system stability.

Documents

References

Departments / Govt Institutions

National Treasury Prudential Authority South African Reserve Bank (SARB)

Summary

The revised emergency liquidity assistance (ELA) framework introduces new internal guidance, improved assessment protocols and operational enhancements, with further legal alignment in progress. SARB strengthened ELA operations, improved rapid liquidity support for distressed institutions and revised sector assessment and protocols. The ELA framework has been updated; sector stress tests are completed and policy communication is active.

Canvas not supported.

Is it working?

The system is effective, with readiness and coordination much improved. Legal alignment is expected to be finalised by 2027. The ELA framework is regularly tested and updated to ensure ongoing effectiveness. Framework integrated into sector crisis management with further upgrades planned.

Actions

The framework is operational and has improved the SARB’s crisis response capacity, though some legal formalisation is still pending. However, ELA drills and SARB stress tests show resilience, and that the protocol is functioning.

Are there plans?

New guidance and operational improvements have been implemented, with regular reviews and coordination between the SARB, Prudential Authority and National Treasury. There are ongoing drills, training, reporting and system upgrades.

Is it on the agenda?

The ELA framework is a standing SARB priority, with ongoing upgrades in response to IMF and FSAP recommendations. SARB Prudential Authority and NT monitor this as part of crisis response protocols.

Goals

To enhance the SARB’s ability to provide timely liquidity support to banks during periods of stress, safeguarding financial system stability. The ultimate goal is to support banks in crises and ensure overall sector stability.

Documents

References

Departments / Govt Institutions

National Treasury Prudential Authority South African Reserve Bank (SARB)

Summary

The South African Reserve Bank (SARB) has formalised its emergency liquidity assistance (ELA) policy through a public position paper on ELA for banks which explains the legal basis (SARB Act and FSR Act), eligibility criteria, collateral requirements, pricing and governance for bilateral emergency support to individual institutions beyond normal standing facilities. ELA is explicitly embedded in the broader resolution and financial stability framework: a draft Prudential Standard on funding and liquidity in resolution (under the FSR Act) requires designated institutions to plan for liquidity needs in resolution and recognises that, in extreme cases, temporary ELA from the SARB may be needed once internal and market‑based sources are exhausted. The deliverables under this reform are: (i) a published ELA policy framework (position paper) that clarifies SARB’s stance, eligibility, collateral, pricing and governance; (ii) integration of ELA into the resolution framework, via a Prudential Standard on funding and liquidity in resolution that sets expectations for internal and market liquidity, and explains when and how SARB may provide temporary support; and (iii) alignment of ELA and liquidity‑support arrangements with the monetary policy implementation framework (MPIF) so that bilateral support co‑exists coherently with standing facilities and systemic‑liquidity operations.

Canvas not supported.

Is it working?

The ELA framework is now transparent at the policy level and integrated into the statutory resolution architecture, which is a marked improvement over earlier, less codified approaches and is recognised positively in IMF and transparency reviews. The remaining challenges are mainly operational and governance‑related: ensuring that designated institutions build realistic liquidity‑in‑resolution plans that minimise reliance on ELA; maintaining strict eligibility, collateral and pricing standards so that ELA remains a last resort, back‑stop tool; and testing coordination between ELA, CODI funding, resolution tools and government backstops in simulated or real stress events.

Actions

Concrete actions already taken include: (i) publication of the position paper on ELA for banks (2022) – a publicly available articulation of SARB’s policy framework for bilateral ELA, including legal basis, purpose, eligibility and key parameters; (ii) publication of a draft Prudential Standard: requirements for funding and liquidity in resolution, with an accompanying statement of need/impact that describes the role of internal/liability‑side resources, market funding and potential SARB temporary liquidity support (including ELA) in resolution; (iii) reform of the monetary‑policy implementation framework (MPIF) and standing‑facility arrangements in 2022 so that systemic‑liquidity tools and bilateral ELA operate within a consistent framework; and (iv) practical application of the framework, with SARB financial‑stability reporting noting at least one ELA application that needed to be considered in 2025, demonstrating that the framework is being used in real‑world cases.

Are there plans?

Plans include: (i) finalising and implementing the Prudential Standard on funding and liquidity in resolution, which explicitly references access to ELA and sets expectations for internal and market funding before recourse to central bank support; (ii) extending resolution‑planning and resolvability assessments to a broader set of designated institutions (including systemically important non‑bank financial institutions and market infrastructures), ensuring ELA policy is consistently understood across sectors; and (iii) continuing work, informed by IMF and FSAP recommendations, to refine ELA documentation, transparency and communication practices while preserving the necessary discretion and confidentiality around specific ELA operations.
rn

Is it on the agenda?

The ELA framework is part of the wider financial stability and resolution reforms highlighted in the FSR Act, SARB’s Financial Stability Reviews and National Treasury’s financial‑sector updates. The 2026 Budget situates these reforms within the broader effort to strengthen resolution planning, the role of the Corporation for Deposit Insurance (CODI) and the financial‑safety‑net architecture, all of which rely on a clear understanding of when and how the central bank can provide temporary liquidity support during stress or resolution. IMF assessments of South Africa’s systemic‑liquidity management and central‑bank transparency also reference the ELA framework as a key element of the safety net.

Goals

To strengthen and clarify the policy and operational framework for emergency liquidity assistance (ELA) as part of South Africa’s financial safety net and resolution architecture, so that solvent but illiquid institutions can obtain time‑limited support without undermining market discipline or exposing taxpayers to undue risk.

Documents

References

Departments / Govt Institutions

National Treasury Prudential Authority South African Reserve Bank (SARB)

Summary

The South African Reserve Bank (SARB) has formalised its emergency liquidity assistance (ELA) policy through a public position paper on ELA for banks which explains the legal basis (SARB Act and FSR Act), eligibility criteria, collateral requirements, pricing and governance for bilateral emergency support to individual institutions beyond normal standing facilities. ELA is explicitly embedded in the broader resolution and financial stability framework: a draft Prudential Standard on funding and liquidity in resolution (under the FSR Act) requires designated institutions to plan for liquidity needs in resolution and recognises that, in extreme cases, temporary ELA from the SARB may be needed once internal and market‑based sources are exhausted. The deliverables under this reform are: (i) a published ELA policy framework (position paper) that clarifies SARB’s stance, eligibility, collateral, pricing and governance; (ii) integration of ELA into the resolution framework, via a Prudential Standard on funding and liquidity in resolution that sets expectations for internal and market liquidity, and explains when and how SARB may provide temporary support; and (iii) alignment of ELA and liquidity‑support arrangements with the monetary policy implementation framework (MPIF) so that bilateral support co‑exists coherently with standing facilities and systemic‑liquidity operations.

Canvas not supported.

Is it working?

The ELA framework is now transparent at the policy level and integrated into the statutory resolution architecture, which is a marked improvement over earlier, less codified approaches and is recognised positively in IMF and transparency reviews. The remaining challenges are mainly operational and governance‑related: ensuring that designated institutions build realistic liquidity‑in‑resolution plans that minimise reliance on ELA; maintaining strict eligibility, collateral and pricing standards so that ELA remains a last resort, back‑stop tool; and testing coordination between ELA, CODI funding, resolution tools and government backstops in simulated or real stress events.

Actions

Concrete actions already taken include: (i) publication of the position paper on ELA for banks (2022) – a publicly available articulation of SARB’s policy framework for bilateral ELA, including legal basis, purpose, eligibility and key parameters; (ii) publication of a draft Prudential Standard: requirements for funding and liquidity in resolution, with an accompanying statement of need/impact that describes the role of internal/liability‑side resources, market funding and potential SARB temporary liquidity support (including ELA) in resolution; (iii) reform of the monetary‑policy implementation framework (MPIF) and standing‑facility arrangements in 2022 so that systemic‑liquidity tools and bilateral ELA operate within a consistent framework; and (iv) practical application of the framework, with SARB financial‑stability reporting noting at least one ELA application that needed to be considered in 2025, demonstrating that the framework is being used in real‑world cases.

Are there plans?

Plans include: (i) finalising and implementing the Prudential Standard on funding and liquidity in resolution, which explicitly references access to ELA and sets expectations for internal and market funding before recourse to central bank support; (ii) extending resolution‑planning and resolvability assessments to a broader set of designated institutions (including systemically important non‑bank financial institutions and market infrastructures), ensuring ELA policy is consistently understood across sectors; and (iii) continuing work, informed by IMF and FSAP recommendations, to refine ELA documentation, transparency and communication practices while preserving the necessary discretion and confidentiality around specific ELA operations.
rn

Is it on the agenda?

The ELA framework is part of the wider financial stability and resolution reforms highlighted in the FSR Act, SARB’s Financial Stability Reviews and National Treasury’s financial‑sector updates. The 2026 Budget situates these reforms within the broader effort to strengthen resolution planning, the role of the Corporation for Deposit Insurance (CODI) and the financial‑safety‑net architecture, all of which rely on a clear understanding of when and how the central bank can provide temporary liquidity support during stress or resolution. IMF assessments of South Africa’s systemic‑liquidity management and central‑bank transparency also reference the ELA framework as a key element of the safety net.

Goals

To strengthen and clarify the policy and operational framework for emergency liquidity assistance (ELA) as part of South Africa’s financial safety net and resolution architecture, so that solvent but illiquid institutions can obtain time‑limited support without undermining market discipline or exposing taxpayers to undue risk.

Documents

References

Departments / Govt Institutions

National Treasury Prudential Authority South African Reserve Bank (SARB)

Analyst: Tinashe Kambadza
Status: in-progress
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