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International Monetary Fund. Western Hemisphere Dept.

Trinidad and Tobago has embraced digitalization to diversify its economy, modernize payments, deliver efficient and inclusive services, and enhance the business climate. The authorities are proactively promoting the digitalization of the society, economy, and government, while carefully embracing Fintech, modernizing the payments system, and enhancing the cybersecurity frameworks. This paper overviews recent trends in these areas as well as the authorities’ strategy and actions to advance the digital agenda safely and inclusively. It also discusses some policy recommendations.

International Monetary Fund. Monetary and Capital Markets Department
This Technical Note focuses on Cyber Resilience and Financial Stability for the Japan Financial Sector Assessment Program. The cyber ecosystem is mature in Japan, with a range of stakeholders involved in ensuring the cybersecurity of the financial sector. The Financial Services Agency (FSA) is responsible for developing and operationalizing the cyber strategy for the financial sector. Cyber risk regulation and supervisory practice need further improvements. The Bank of Japan (BOJ) should strengthen the cyber risk oversight of financial market infrastructures. The FSA would benefit from deepening its analysis of the operational interconnectedness of the financial system. Further improvements in the response and recovery capabilities are recommended. The FSA and BOJ should keep upgrading, as necessary, a range of extreme but plausible cyber scenarios along with their existing Business Continuity Plans and/or Cyber Incident Response and Recovery Plans, for the financial sector. The authorities currently have strong cyber incident reporting regimes in place, with clear definitions, taxonomies, thresholds, and communication channels.
International Monetary Fund. Monetary and Capital Markets Department

Abstract

Chapter 1 documents that near-term global financial stability risks have receded amid expectations that global disinflation is entering its last mile. However, along it, there are several salient risks and a build-up of medium-term vulnerabilities. Chapter 2 assesses vulnerabilities and potential risks to financial stability in corporate private credit, a rapidly growing asset class—traditionally focused on providing loans to midsize firms outside the realms of either commercial banks or public debt markets—that now rivals other major credit markets in size. Chapter 3 shows that while cyber incidents have thus far not been systemic, the probability of severe cyber incidents has increased, posing an acute threat to macrofinancial stability.

International Monetary Fund. Western Hemisphere Dept.

In recent years, the Chilean financial sector experienced a series of cyberattacks, and this growing global risk of cybersecurity is posing a threat to the sector. Banks and financial market infrastructures appear to be resilient against cybersecurity risks, supported by a comprehensive regulatory framework, but lack of substitutability and high concentration of these institutions could pose systemic risk to the financial system. Moreover, given the current business segment of the Chilean fintech sector, expansion of the sector would lead to larger exposures to cybersecurity risk which the ongoing regulation of the sector by the authorities aims to mitigate. Ensuring sufficient human resources to ensure effective cybersecurity supervision of the financial sector as well as implementing ongoing policy initiatives, are warranted.

International Monetary Fund. Western Hemisphere Dept.
This Selected Issues paper studies renewable energy and attempts to estimate the gross domestic product (GDP) impact and assesses the role of policies in Chile. Chile has a comparative advantage in renewable energy. IMF estimates show that replacing coal power with solar and wind power, as announced by the government, could boost the long-term GDP level by at least 1 percentage point. The analysis indicates that the benefits of having targeted support for the transmission of electricity exceed costs. An additional benefit is the greater economic resilience to abrupt increases in coal and fuel prices that can have large negative impacts on the economy. A key constraint for the renewable energy sector is currently the transmission from where it is produced to where it is used. A cost-benefit analysis shows that state support industries, such as electricity transmission, may have economic benefits that outweigh the costs.
International Monetary Fund. Monetary and Capital Markets Department

The Icelandic financial system is large, concentrated and interconnected - banks and Non-Bank Financial Institutions (NBFIs) - domestically and internationally. There are 10 banks: 4 commercial banks and 6 savings banks, but the system is dominated by just three of the commercial banks (Arion banki, Íslandsbanki and Landsbankinn) that together account for 95 percent of banking assets. Cash use is declining as a percentage of point of sale (POS) transactions, leading to an increasing dependence on electronic payment means. The debit and credit cards used for most retail transactions rely on international communications with Visa and Mastercard.

International Monetary Fund. Monetary and Capital Markets Department
This technical note focuses on cyber and operational resilience, supervision and oversight in Iceland. The Icelandic financial sector has not experienced seriously disruptive cyber-attacks or operational issues in recent years, but threats are growing. Iceland’s dependence on international connectivity for both debit and credit card systems introduces a significant vulnerability into the payment system. There is no dedicated cyber security strategy for the finance sector. Operational risk experts in the Central Bank of Iceland (CBI) are experienced and well regarded by financial institutions, but more resources are needed to provide adequate coverage of this increasingly important area. The supervision of financial institutions’ cybersecurity is highly dependent on self-assessments by the regulated entities themselves and independent reviews carried out by third parties. CBI should regularly revise the list of critical operations and critical service providers for internal use and for presentation to the Financial Stability Committee and Financial Stability Council. CBI is encouraged to enhance its incident dashboard by summarizing cyber incidents and examining trends.
International Monetary Fund. Monetary and Capital Markets Department
This technical note evaluates strengthening cybersecurity in financial institutions of Trinidad and Tobago. The deliverables included a capacity-building seminar on regulation of cyber risk. The Central Bank of Trinidad and Tobago identified the need for filling regulatory gaps and desires to issue a focused guideline on cybersecurity covering governance, risk management, incident reporting, and cyber hygiene, and intends to develop a draft guideline for consultation with its regulated institutions in the first quarter of 2023. Supervisory arrangements for Information and Communication Technology/cyber risks need further improvements and resource constraints within Financial Institutions Supervision Department need to be addressed urgently. The Identity and Access Management project has been formally set up and is now in Phase 1, which is considered preparatory. The governance of the project, the high-level roadmap, and the deliverables for Phase 1 are generally in line with good practices. It is recommended to establish regular cybersecurity meetings and reporting regime at the Board level with the participation of the Head of IT Security.
International Monetary Fund. Monetary and Capital Markets Department

This technical note evaluates strengthening cybersecurity in financial institutions of Trinidad and Tobago. The deliverables included a capacity-building seminar on regulation of cyber risk. The Central Bank of Trinidad and Tobago identified the need for filling regulatory gaps and desires to issue a focused guideline on cybersecurity covering governance, risk management, incident reporting, and cyber hygiene, and intends to develop a draft guideline for consultation with its regulated institutions in the first quarter of 2023. Supervisory arrangements for Information and Communication Technology/cyber risks need further improvements and resource constraints within Financial Institutions Supervision Department need to be addressed urgently. The Identity and Access Management project has been formally set up and is now in Phase 1, which is considered preparatory. The governance of the project, the high-level roadmap, and the deliverables for Phase 1 are generally in line with good practices. It is recommended to establish regular cybersecurity meetings and reporting regime at the Board level with the participation of the Head of IT Security.