Policy Credibility can also be enhanced if central banks submit themselves to third party assessments, e.g. by the IMF, World Bank, and subscribe to acceptable international conventions and codes on central banking. Such a convention is the 1988 Basel Accord, which established guidelines on international minimum capital standard that limits banks’ capital requirement to their credit exposure.
It is therefore vital that all project proposals be thoroughly and reliably assessed for their economic, financial and technical viability before loans are disbursed. More importantly for banks, projects should have a clear and equitable contractual structure that optimally allocates project risks among participants. Such risks should be well-mitigated at the outset to make projects bankable.