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Jamaica's financial system is resilient to global economic headwinds — FSSC

Friday, November 01, 2019

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The Financial System Stability Committee (FSSC) in the wake of its review of Bank of Jamaica's (BOJ) quarterly financial stability assessments has said that despite the global economic uncertainties, the country's financial system continues to be resilient.

In a release statement issued on Thursday, the FSSC in its latest report said that its review of the BOJ's June 2019 macroprudential policy report has found that threats to the financial system remained tempered within the context of a generally favourable domestic macroeconomic environment.

“While Jamaica's economic growth is expected to slow and there are headwinds from the global economy, stress tests done by the BOJ have shown that the Jamaican financial system is resilient to macroeconomic and financial shocks,” the release said.

In addition to this it was further noted that the regulated financial institutions have adequate capital with all the other key financial indicators such as profitability and liquidity continuing to remain stable.

The release noted the continued reduction in the Government of Jamaica's footprint in the domestic debt market, the continued accommodative monetary policy and the associated increase in credit issued to households and businesses by banks, while non-performing loans as a share of total loans provided by banks to the private sector is low and declining.

The FSSC noted it will continue to monitor the debt sustainability of borrowers.

Additionally, BOJ analysis also showed that despite the interconnected nature of financial institutions, the financial sector is generally resilient to adverse developments in any one entity.

As a measure, the FSSC says it will, however, continue its regular review of financial system stability assessments and make recommendations where necessary to assist in the execution of the central bank's financial system stability mandate.

The BOJ in consultation with the FSSC, is empowered to develop prescriptive rules, standards and codes for financial institutions, which specifically address gaps and imbalances that could threaten financial system stability as a whole. This oversight complements and does not replace the responsibilities and authority of both entities to supervise and regulate, respectively, the deposit-taking, insurance, securities and pensions industries.


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