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International Monetary Fund. Monetary and Capital Markets Department
This virtual technical assistance (TA) mission supported the Agency in strengthening certain elements of its risk-based supervisory framework. The mission provided recommendations and training to the Agency on the assessment of banks’ recovery plans and interest rate risk in the banking book (IRRBB). The mission benefited from simultaneous translation. The priorities for the forthcoming TA missions were discussed with the Agency (strengthening cybersecurity in financial institutions, and assessment of banks’ liquidity within the SREP framework).
Abdullah Al-Hassan, Imen Benmohamed, Aidyn Bibolov, Giovanni Ugazio, and Ms. Tian Zhang
The Gulf Cooperation Council region faced a significant economic toll from the COVID-19 pandemic and oil price shocks in 2020. Policymakers responded to the pandemic with decisive and broad measures to support households and businesses and mitigate the long-term impact on the economy. Financial vulnerabilities have been generally contained, reflecting ongoing policy support and the rebound in economic activity and oil prices, as well as banks entering the COVID-19 crisis with strong capital, liquidity, and profitability. The banking systems remained well-capitalized, but profitability and asset quality were adversely affected. Ongoing COVID-19 policy support could also obscure deterioration in asset quality. Policymakers need to continue to strike a balance between supporting recovery and mitigating risks to financial stability, including ensuring that banks’ buffers are adequate to withstand prolonged pandemic and withdrawal of COVID-related policy support measures. Addressing data gaps would help policymakers to further assess vulnerabilities and mitigate sectoral risks.
International Monetary Fund. Monetary and Capital Markets Department
This paper discusses findings of the Detailed Assessment of Observance of the Basel Core Principles (BCP) for Effective Banking Supervision in Romania. The supervisory approach of the National Bank of Romania (NBR) has been changing toward a more risk based approach since the previous BCP assessment, but more needs to be done. Further development of the NBR’s supervisory approach will make supervision more effective and in line with the requirements of the 2012 BCP. The NBR may need to devote more supervisory attention to banks’ risk models and building up further expertise in specialized areas such as information technology and market risk. In the area of corrective actions and sanctions, the NBR should review its framework to ensure it is protected from undue legal challenges.
International Monetary Fund. Monetary and Capital Markets Department
This Technical Note presents an update on Banking Sector Supervision Core Principles Implementation in Bosnia and Herzegovina. The system of banking supervision oversight has significantly improved since the last review in 2006, but shortcomings remain. Both supervisory authorities have made progress in enhancing the regulatory framework and supervisory processes since the 2006 Financial Sector Assessment Program. The banking agencies are in the process of preparing a new Law on Banks that should address deficiencies in the supervisory powers, resolution tools, and consolidated supervision. Comprehensive regulations on risk management have been drafted that will address remaining deficiencies that are highlighted in this assessment.
International Monetary Fund. Monetary and Capital Markets Department
This paper presents an assessment of compliance with the Basel Core Principles for Effective Banking Supervision in El Salvador. The regulatory authority Superintendencia del Sistema Financiero (SSF) has taken a number of initiatives to strengthen and upgrade supervision. This includes, among others, a risk unit with specialized expertise and continued efforts to foster cross-border cooperation and coordination. Despite considerable efforts, for the SSF is commended for its efforts, the lack of regulation in practically all risk categories is a major impediment to further progress. The lack of standards in those areas, combined with severe shortcomings in legal protection and deficiencies in the remedial action framework for addressing minor transgressions, limits the SSF’s ability to address imprudent behavior by banks.
International Monetary Fund. European Dept.
The Belgian financial system is relatively large, concentrated, and interconnected and has a high level of compliance with the Basel Core Principles (BCPs) for effective banking supervision. The National Bank of Belgium (NBB) deploys high-quality supervisory practices and has clear lines of accountability, transparency, and separate funding when acting in its supervisory capacity. The Belgian authorities have established a Resolution Fund (RF) vesting it with powers to take preventative measures and to facilitate resolution procedures.
International Monetary Fund
This report is a detailed assessment of Brazil’s compliance with the Basel Core Principles. Brazil has a well-defined banking supervision process that grants the Banco Central do Brasil (BCB) broad enforcement powers to carry out corrective actions. The licensing process has been enhanced, and considerable improvements have been implemented with regards to debt collection by the BCB. The authorities have adopted strategies to improve compliance measures. Corrective and remedial powers of supervisors have been streamlined. Consultations are under way for implementing Basel-III.
International Monetary Fund
A detailed assessment report on the observance of China’s compliance of Basel Core Principles for effective banking supervision is presented. Regulation and supervision of China’s banking system has made impressive progress in the past few years, led by an activist, forward-looking regulator, the China Banking Regulatory Commission, with a clear safety and soundness mandate that has been supported by banks and by the State. The macroeconomic environment is characterized by rapid growth, with concerns about overheating and asset price overvaluation.
International Monetary Fund
This technical paper focuses on the challenges faced by Paraguay’s budget resources. Paraguay’s government should adopt a forward-looking fiscal strategy. The strategy’s main goals should be to contain budget dependence on Itaipu revenues, preserve fiscal discipline, and allow for the gradual and sustainable transformation of the envisaged, yet temporary, windfall into other forms of financial, physical, and human capital. The creation of a special fund could help mobilize public support for saving part of the windfall and building a buffer for the future.
International Monetary Fund
This paper discusses key findings of the Detailed Assessment of Basel Core Principles (BCPs) for Effective Banking Supervision on the Republic of Serbia. The assessment reveals that Serbia has made considerable progress toward enhanced compliance with the BCPs and with international standards. A major overhaul of the legal framework—the enactment of the new laws on banks in 2005 and the issuance of new regulations—has provided the basis for this improvement, which are reflected in upgraded scores for a considerable number of BCPs.