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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 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