Issues (first cut) 1.Significant exposure (need for speed) 2.Lack of existing capacity (time to build) 3.Size of country (high cost of regulation) 4.Legislative inertia (need for simplicity) 5.Need to avoid one-size-fits-all 6.Need to not distract banking supervision 7.Need to avoid perceptions of guarantee 8.Harmonization with neighbour 9.Departmental tensions

First Cut Model Singapore

Issues (second cut) 1.Significant exposure (need for speed) 2.Lack of existing capacity (time to build) 3.Need to not distract banking supervision 4.Legislative inertia (need for simplicity) 5.Size of country (high cost of regulation) 6.Need to avoid perceptions of guarantee 7.Need to avoid one-size-fits-all 8.Harmonization with neighbour 9.Departmental tensions

Second Cut Model Start as Irish/Finnish – new Non- Bank Regulatory Agency established initially as a “subsidiary” of CB, with a time fuse to become independent (i.e. transitioning through to South African model)

Issues (third cut) 1.Significant exposure (need for speed) 2.Legislative inertia (need for simplicity)/ Departmental tensions 3.Need to avoid perceptions of guarantee 4.Need to not distract banking supervision 5.Lack of existing capacity (time to build) 6.Size of country (high cost of regulation) 7.Need to avoid one-size-fits-all 8.Harmonization with neighbour

Final Weighing Pros for within CB: 1.Independence 2.Competitive Salaries 3.Synergies/cost savings Pros for outside: 1.No distraction for banking supervision 2.No misperceptions about guarantees

Outcome 1.CB to keep banking supervision (and building societies for the present) 2.New independent NBFI regulator to regulate and supervise prudential and conduct for: Insurance Pensions Capital markets (dealers etc) Credit co-ops 3.Note exclusions (for the present – microfinance & development financiers)

Implementation/Transition 1.Enabling legislation with powers and over- rides (simple as possible) – agency to be independent and accountable 2.“Institutional” Structure with around 50 staff 3.Transition to allow capital markets later and BS even later … over 2 – 3 years 4.Industry funded 5.Budget in the order of 25 basis points on industry assets

And the Country is ….. Swaziland