Suriname. Financial Sector Strengthening I

The program will support the preparation and implementation of measures to improve the legal, regulatory, institutional and public policy framework for the financial sector. Areas, which could be addressed, include (i) consolidated and non-bank supervision; (ii) monetary policy management; (iii) public bank reform; and (iv) pension reform.

SU-L1023: Financial Sector Strengthening I

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Consultation on the application of Directive 2007/44 EC as regards acquisitions and increase of holdings in the financial sector

The aim of Directive 2007/44/EC was to ensure that supervisory authorities are as specific and transparent as possible if they have doubts about the sound and prudent management of the financial institution concerned, and to minimise the scope for public authorities to invoke prudential rules in order to hinder cross-border mergers and acquisitions for protectionist reasons.

According to Article 6 of the Directive, the Commission has to review the application of the Directive and submit a report to the European Parliament and the Council, together with any appropriate proposals to review the Directive. The responses to this consultation will provide useful information on how the Directive was applied in the EU Member States and will help the Commission to prepare the report on the application of the Directive.

Period of consultation. From 08.12.2011 to 10.02.2012

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How to submit your contribution
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View the consultation documents
Consultation paper Text of the directive
Contact details
Responsible service:	DG Internal Market and Services
E-mail:	MARKT-M-A-CONSULTATION@ec.europa.eu
Postal address:	European Commission, B–1049 Brussels

Results of consultation and next steps

Protection of personal data Specific privacy statement

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New IDB loans for Trinidad & Tobago total US$130 million for climate change and financial sector strengthening

IDB.News Releases.Dec 5, 2011.The Inter-American Development Bank (IDB) approved a total of US$130 million for Trinidad and Tobago, including US$80 million for climate change measures and US$50 million to strengthen the financial sector. “IDB lending and technical assistance to the country is expected to total around US$1.5 billion from 2011 through 2015, with a focus on the country’s ambitious reform program,” said IDB Representative in Trinidad and Tobago, Iwan Sewberath Misser. “Our operations support public sector management, financial sector regulation, private sector development, education, social protection, climate change, energy, water and sanitation, and transport.”

In 2011, new financing for the country totaled US$290 million.

For 2012 the IDB will place an emphasis on the rehabilitation of the waste water systems, solid waste management, infrastructure improvements, local government reform, and in assisting with the rationalization of State Owned Enterprises (SOEs) through the public offerings program in Trinidad and Tobago.

The two loans approved are the following:

Climate Change

A US$80 million loan will help Trinidad and Tobago to incorporate the consideration of the impact of climate change into national policies and institutions.This initiative will also promote carbon markets and policies to reduce greenhouse gas emissions.

“The program will strengthen and modernize the regulatory, institutional and policy framework to develop and promote instruments to assess and reduce vulnerability and risks associated with climate change,” said IDB team leader Gerard Alleng. “Mitigation and adaptation measures will be key in an island state highly vulnerable to the impact of global climate change.”

Financial Sector
A US$50 million loan will strengthen the financial sector supervisory and regulatory framework.

“Trinidad and Tobago is considered the regional financial center for the English-speaking Caribbean,” said IDB team leader Juan Antonio Ketterer. “This program will focus on reinforcing macroeconomic stability to minimize the probability of exposure to any future vulnerability or systemic crisis.”

The Ministry of Finance will be in charge of both projects. The loans are for a 20-year term, with a four-year and five-year grace period respectively, at a variable interest rate based on LIBOR.'

Cambodia.Third Financial Sector Program Loan

ADB.29 November 2011 - The Asian Development Bank has approved the following program loan and technical assistance: The funds for the first phase of a third program of financial sector reforms support a variety of policy adjustments. These include measures to maintain financial stability, to boost market and consumer confidence and improve financial intermediation, to promote good governance, and to enhance sector efficiency.

Amount: $15 million loan from the Asian Development Fund. Technical assistance grants of $1.1 million, with $800,000 from ADB’s Technical Assistance Special Fund and $300,000 from the Cooperation Fund for Regional Trade and Financial Security Initiative. Project ID: 42305h

Financial Sector Development Program (Cluster 3, SP 1): Cambodia

IMF Calls for Further Reforms in China’s Financial System

IMF. Press Release No. 11/409.November 14, 2011. China’s financial system is robust overall, but faces a steady build-up in vulnerabilities. While significant progress has been made towards developing a more commercially-oriented financial sector, and supervision and regulation are being strengthened, risks stem from the growing complexity of the system and the uncertainties surrounding the global economy. Further reforms are needed to support financial stability and encourage strong and balanced growth, the International Monetary Fund (IMF) says in its first formal evaluation of China’s financial sector published today.

The IMF’s first Financial Sector Assessment Program (FSAP) review of China was carried out jointly with the World Bank. China is one of 25 systemically important countries that have agreed to mandatory assessments at least once every five years. The FSAPs are part of the IMF’s activities in financial surveillance and the monitoring of the international monetary system.

“China’s banks and financial sector are healthy, but there are vulnerabilities that should be addressed by the authorities,” says Jonathan Fiechter, deputy director of the IMF’s Monetary and Capital Markets Department and the head of the IMF team that conducted the FSAP. “While the existing structure fosters high savings and high levels of liquidity, it also creates the risk of capital misallocation and the formation of bubbles, especially in real estate. The cost of such distortions will only rise over time, so the sooner these distortions are addressed the better.”

Risks

According to the FSAP report, China’s financial sector is confronting several near-term risks: deterioration in loan quality due to rapid credit expansion; growing disintermediation by shadow banks and off-balance sheet exposures; a downturn in real estate prices; and the uncertainties of the global economic scenario. Medium-term vulnerabilities are also building and could impair the needed reorientation of the financial system to support the country’s future growth. Moving along this path will pose additional risks, so priority must be given to establishing the institutional and operational preconditions that are crucial for a wide-ranging financial reform agenda.

The main areas of reform should include:

• Steps to broaden financial markets and services, and developing diversified modalities of financial intermediation that would foster healthy competition among banks;
• A reorientation of the role of government away from using the banking system to carry out broad government policy goals and to allow lending decisions to be based on commercial goals;
• Expansion of the use of market-based monetary policy instruments, using interest rates as the main instrument to govern credit expansion, rather than administrative measures;
• An upgrading of the financial infrastructure and legal frameworks, including strengthening the payments and settlement systems, as well as consumer protection and expansion of financial literacy.

The Chinese authorities have begun to move on many of its recommendations, and the IMF stands ready to provide technical cooperation in areas relating to strengthening the financial stability framework in China.

Stress Tests

Stress tests conducted jointly by the Fund and Chinese authorities of the country’s largest 17 commercial banks indicate that most of them appear to be resilient to isolated shocks, which include: a sharp deterioration in asset quality (including a correction in the real estate markets), shifts in the yield curve, and changes in the exchange rate. If several of these risks were to occur at the same time, however, the banking system could be severely impacted, the report warns.

About the FSAP

The Financial Sector Assessment Program, established in 1999, is an in-depth analysis of a country’s financial sector. The IMF conducts mandatory FSAPs for the 25 jurisdictions with systemically important financial sectors, and any member countries that request it. Assessments in developing and emerging market countries are conducted jointly with the World Bank. FSAPs include two components: a financial stability assessment, which is the responsibility of the Fund; and, in developing and emerging market countries, a financial development assessment, conducted by the World Bank.

To assess the stability of the financial sector, IMF teams examine the soundness of the banking and other financial sectors; rate the quality of bank, insurance, and capital market supervision against accepted international standards; and evaluate the ability of supervisors, policymakers, and financial safety nets to respond effectively to a systemic crisis. While FSAPs do not evaluate the health of individual financial institutions and cannot predict or prevent financial crises, they identify the main vulnerabilities that could trigger one.

In September 2010, the IMF made financial stability assessments under the FSAP a mandatory part of IMF surveillance every five years for jurisdictions deemed systemically important based on the size of the financial sector and their global interconnectedness. The countries affected by this decision are: Australia, Austria, Belgium, Brazil, Canada, China, France, Germany, Hong Kong SAR, Italy, Japan, India, Ireland, Luxembourg, Mexico, the Netherlands, Russia, Singapore, South Korea, Spain, Sweden, Switzerland, Turkey, the United Kingdom, and the United States.

For more information on FSAPs, see Press Release No. 10/357.