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Asia and Pacific > Maldives

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Cover IMF Staff Country Reports
Maldives: Financial Sector Assessment Program-Technical Note on Bank Stress Testing and Climate Risk Analysis
International Monetary Fund. Monetary and Capital Markets Department
This paper presents a technical note on bank stress testing and climate risks analysis in Maldives. Although the Maldives’ economy has rebounded strongly from the pandemic-induced contraction, macro and financial vulnerabilities remain. The stress test results broadly corroborated the identified vulnerabilities and quantified them. The climate risk analysis considered a micro approach that shocks banks’ immovable asset related loans under three climate scenarios. The system appears well capitalized, although capital ratios are biased upward by large government paper holdings with zero risk weights. The results of the solvency stress test corroborate that banks are less vulnerable to credit risk than they are to the impact of a possible unraveling of the sovereign–bank nexus. Banks’ nonperforming loans (NPL) ratios are projected to increase slightly in the baseline and moderately under stress. The resulting additional loan loss provisions are easily offset by ample pre-provision income.
Keywords:
summary market Risk sensitivity analysis result; market risk sensitivity analysis result; B. liquidity coverage ratio; aggregate capitalization; deposit concentration sensitivity analysis; market Risk sensitivity analysis result; summary solvency Risk result; sensitivity analysis assumption; Stress testing; Nonperforming loans; Loans; Currencies; Commercial banks; Global
Cover IMF Staff Country Reports
Maldives: Financial Sector Assessment Program-Technical Note on Financial Safety Net and Crisis Management Arrangements
International Monetary Fund. Monetary and Capital Markets Department
This paper highlights technical note on financial safety net and crisis management arrangements in Maldives. Maldives legislation includes important elements of a financial safety net and crisis management framework but there are areas for streamlining and improvement. The Maldives Banking Act (MBA) provides tools for the Maldives Monetary Authority (MMA) to implement early intervention and resolution measures. However, there are shortcomings that need to be addressed to enhance both frameworks and align them with international good practices. The triggers for initiating resolution should be strengthened including a forward-looking perspective. The governance trigger should be enhanced by providing links to bank’s capacity to maintain adequate systems and controls and to effectively manage its risks. The requirement for the delivery of a conservator’s report should not be a prior requirement to implementing resolution powers, as this may jeopardize the timely implementation of effective resolution actions. The MBA should be amended to empower the MMA to trigger resolution and for resolution powers to be applied immediately for a bank deemed nonviable or likely nonviable.
Keywords:
IMF-World Bank Financial Sector Assessment Program; A. depositor protection; deposit insurance regulation; capital market development authority; FSAP assessment's finding; inter-agency arrangement; Maldives banking Act; staff team of the International Monetary Fund; Bank resolution; Bank resolution framework; Lender of last resort; Bridge bank; Crisis prevention; Global
Cover IMF Staff Country Reports
Maldives: Financial Sector Assessment Program-Technical Note on Macroprudential Policy
International Monetary Fund. Monetary and Capital Markets Department
This Technical Note on Maldives discusses macroprudential policy. The creation of a macroprudential committee with a clear mandate and decision-making powers is recommended. This committee would rely on a well-resourced financial stability unit, acting as a secretariat and providing data-driven recommendations. The Maldives Monetary Authority (MMA) should consider creating a set of early warning indicators and further develop its macroprudential toolkit. A comprehensive dashboard of both broad-based and sectoral indicators would help monitor systemic risks. Indicators of credit, real-estate development, corporate performance, and household indebtedness should be considered for implementation. In addition, the introduction of several key macroprudential instruments would help prevent the emergence of systemic risk. MMA should follow through on its plan to introduce two household-related instruments. The Financial Sector Assessment Program team recommends the development of additional instruments to safeguard bank liquidity and reduce the currency mismatch of banks as well as other instruments recommended by the Basel Committee on Banking Supervision.
Keywords:
IMF-World Bank Financial Sector Assessment Program; housing development finance corporation; capital market development authority; FSAP's finding; Maldives finance; Financial sector stability; Financial Sector Assessment Program; Macroprudential policy; Systemic risk; Liquidity requirements; Global
Cover IMF Staff Country Reports
Maldives: Financial System Stability Assessment; and Press Release
International Monetary Fund. Monetary and Capital Markets Department
This paper presents financial system stability assessment (FSSA) report for Maldives. Maldives is a tourism dependent economy with a small financial sector dominated by state-owned banks. Systemic risks stem largely from a growing sovereign-bank nexus, high dollarization, and a shortage of foreign exchange. The Financial Sector Assessment Program concluded that further strengthening of financial sector policies is needed to improve the resilience of the financial system. The authorities should adopt regulation to address frictions in the foreign exchange market, resume liquidity management operations and develop systemic risk indicators. Priority should also be given to establishing a macroprudential framework along with instruments, publishing a financial stability report, and ensuring full reporting of non-bank payment obligations. The financial safety net and crisis management arrangements should be enhanced by improving early intervention mechanisms, introducing recovery and resolution planning, and enhancing the deposit insurance system. In addition, an effective liquidity assistance framework should be established.
Keywords:
World Bank FSAP mission; risk analysis; IMF FSAP stress test result; MMA central government debt holding; FSAP finding; bank capitalization; Financial Sector Assessment Program; Stress testing; Financial sector stability; Global; Asia and Pacific
Cover IMF Staff Country Reports
Maldives: Technical Assistance Report-Financial Soundness Indicators Mission
International Monetary Fund. Statistics Dept.
This Technical Assistance report on the Maldives discusses the findings and recommendations of financial soundness indicators (FSI) statistics mission. The mission, in collaboration with the staff of the Maldives Monetary Authority, updated the existing bridge tables to compile FSIs for deposit takers (DT) and developed new ones for insurance corporations, other financial corporations and households for reporting to IMF’s Statistics Department. The mission found that source data for compiling FSIs for DTs, and ICs are broadly adequate and generally meet the criteria established by the 2019 FSIs Guide for publication on the FSIs data portal. The commercial banks operating in Maldives have already adopted the International Financial Reporting Standard 9 (IFRS 9). The capital adequacy ratios of banks followed mainly the Basel I framework. The definitions of nonperforming loans and liquid assets are reviewed during the mission and recommendations are provided to update the definitions in line with the 2019 FSIs Guide and IFRS 9. The mission also recommends the publication of the new metadata and institutional coverage report forms accompanying the publication of FSIs.
Keywords:
Maldives; Financial Soundness Indicators; 2019 FSIs Guide; Deposit takers; Other financial corporations; Insurance Corporations; H. FSIs data; TA mission; MMA staff; FSIs Guide; FSIs coverage; Maldives pension administration office; Financial statements; Loans; Real estate prices; Financial sector
Cover Finance & Development
Finance and Development, September 2021
International Monetary Fund
Finance and Development, September 2021
Keywords:
IEA report; IMF staff research; emissions target; Bitcoin mining; climate threat; Climate change; Climate finance; Greenhouse gas emissions; Virtual currencies; Global; Asia and Pacific; Africa; Pacific Islands; Sub-Saharan Africa
Cover Finance & Development
Finance and Development, September 2021
International Monetary Fund
Finance and Development, September 2021
Keywords:
IEA report; IMF staff research; emissions target; Bitcoin mining; climate threat; Climate change; Climate finance; Greenhouse gas emissions; Virtual currencies; Global; Asia and Pacific; Africa; Pacific Islands; Sub-Saharan Africa
Cover Finance & Development
Finance and Development, September 2021
International Monetary Fund
Finance and Development, September 2021
Keywords:
IEA report; IMF staff research; emissions target; Bitcoin mining; climate threat; Climate change; Climate finance; Greenhouse gas emissions; Virtual currencies; Global; Asia and Pacific; Africa; Pacific Islands; Sub-Saharan Africa; pricing carbon; bitcoin rival Ethereum
Cover Finance & Development
Finance and Development, September 2021
International Monetary Fund
Finance and Development, September 2021
Keywords:
IEA report; IMF staff research; emissions target; Bitcoin mining; climate threat; Climate change; Climate finance; Greenhouse gas emissions; Virtual currencies; Global; Asia and Pacific; Africa; Pacific Islands; Sub-Saharan Africa
Cover Finance & Development
Finance and Development, September 2021
International Monetary Fund
Finance and Development, September 2021
Keywords:
IEA report; IMF staff research; emissions target; Bitcoin mining; climate threat; Climate change; Climate finance; Greenhouse gas emissions; Virtual currencies; Global; Asia and Pacific; Africa; Pacific Islands; Sub-Saharan Africa