Understanding Correspondent Banking Trends: A Monitoring Framework

Abstract

The withdrawal of correspondent banking relationships (CBRs) remains a concern for the international community because, in affected jurisdictions, the decline could have potential adverse consequences on international trade, growth, financial inclusion, and the stability and integrity of the financial system. Building on existing initiatives and IMF technical assistance, this paper discusses a framework that can be readily used by central banks and supervisory authorities to effectively monitor the developments of CBRs in their jurisdiction. The working paper explains the monitoring framework and includes the necessary reporting templates and an analytical tool for the collection of data and analysis of CBRs.

Financial Sanctions, SWIFT, and the Architecture of the International Payments System

“…This is especially true if the respondent bank is located in a small country, where the volume of transactions is low, or in a country deemed at high risk for AML/CFT compliance. The high cost and low profitability have resulted in a decrease in the number of correspondent banking relationships over the last decade, a phenomenon called "de-risking" (Grolleman and Jutrsa 2017;Miller 2022). The number of active correspondent banks worldwide fell by roughly 22 percent between 2011 and 2019, with banks losing correspondents even as the value of cross-border payments continued to grow; the decline has been especially pronounced in Latin America.…”

Cabo Verde: Selected Issues Paper

“…This paper provides an overview of the nature and scope of corresponding banking relationships (CBRs) withdrawals in Cabo Verde and discusses policy options to address this challenge. The paper reports the results of a bank level survey and employs the minimum scope framework developed by Grolleman and Jutrsa (2017) on Cabo Verdean bank level data for the period 2014-2017.…”