Financial Levianthans Under Review in 2016

SUMMARY

Some of the world’s largest, most connected financial systems including the United Kingdom and Germany will undergo their mandatory five-year financial stability review by the International Monetary Fund in 2016.

 
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  • China, Germany, United Kingdom among countries IMF plans to assess
  • Smaller financial hubs also on the list
  • Systemic aspects, safety, stability of country financial systems in spotlight
  • Under the aegis of the Financial Sector Assessment Program, the IMF is assessing big, systemically important countries such as Germany and the United Kingdom, as well as medium-sized, and in some cases regionally important financial systems such as Russia and Mexico.

    In the wake of the global economic crisis, the IMF has strengthened its surveillance of systemic countries’ financial systems. In September 2010, the IMF’s Executive Board agreed the world’s top 25 financial sectors would undergo a mandatory financial check-up every five years. In 2014, the IMF expanded the list to 29 countries, based on updated criteria.

    Belarus
    China*
    Finland
    Germany
    Guyana*
    Indonesia*
    Ireland
    Jamaica*
    Lebanon
    Luxembourg*
    Madagascar
    Mauritius
    Mexico
    Montenegro
    Romania*
    Russia
    Sweden
    Turkey
    United Kingdom
    Zambia
    *Note: These countries’ FSAPs will begin in 2016 and conclude in 2017.

    IMF focus on financial stability

    The IMF program assesses three key components of financial stability in all countries:

    • The soundness of banks and other major financial institutions, including through stress tests

    • The quality of financial system oversight, including banking, securities, and insurance where the sectors are systemically important, the macroprudential framework; and

    • The ability of policymakers, and financial safety nets to withstand and respond effectively in case of deep financial stress.

    The IMF tailors country assessments to analyze issues of particular interest or concern in each country. In 2016, the IMF teams will focus their analysis on systemic risks and macroprudential policies. Some highlights for this year’s FSAP assessments include:

    China: The FSAP will look into how the financial system's structure and performance have evolved in recent years. The FSAP will assess the resilience of the financial sector to shocks emanating from abroad, and China's ongoing financial liberalization and macroeconomic rebalancing. The FSAP will also evaluate the significant changes in the regulatory and supervisory framework in response to the evolution of financial sector.

    Germany: The FSAP will be the first review of a euro area country since the establishment of the Single Supervisory Mechanism and the Single Resolution Mechanism. The assessment will tackle the complexity of the new institutional...

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