The bottom line is that easier monetary policy is no answer to serious distress, contrary to widespread belief. What can the government do? The government is in the process of speeding up the debt recovery process, and creating a new Bankruptcy system. These are important steps to improve the resolution process. In the near term, however, two actions will pay large dividends.
Commercial banks, Forex bureaus, and payment service providers (PSP) have over the last few years strengthened their AML/CFT screening, which proved a strong foundation for the demonetisation. Additionally, reporting and monitoring was scaled up, with positive results—during this period CBK conducted 15 targeted inspections on financial institutions, and over 3,000 Suspicious Transaction Reports (STRs) were reported for further investigation.