While prospects for the GCC are favorable, important challenges remain. The immediate challenge is to complete the cleaning up of banks’ balance sheets and facilitate the restructuring of the nonbanking sector in some countries. This should be accompanied by enhancements to regulatory, supervisory, and resolution frameworks, where needed. Over the medium-term, these measures should be accompanied by improved disclosure; an expanded set of macroprudential tools to support monetary and fiscal policy; and regulatory and supervisory frameworks that focus on the stability of the financial system as a whole.
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