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Europe > Ukraine

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Cover IMF Staff Country Reports
Belgium: Financial Sector Assessment Program-Financial System Stability Assessment
International Monetary Fund. Monetary and Capital Markets Department
This paper focuses on the report on Belgium’s Financial Sector Assessment Program. Economic activity has slowed, core inflation remains high, and the fiscal outlook is challenging. The financial sector has remained resilient despite a series of shocks. Key financial stability risks emanate from the large, concentrated, and interconnected banking sector, private sector indebtedness, and high exposure to real estate. Bank solvency stress tests indicate that the financial sector is resilient under severe macroeconomic shocks. Although there is some heterogeneity across financial institutions, all banks would satisfy the minimum capital criteria. The authorities should enhance the National Bank of Belgium’s powers to set macroprudential policy in line with its financial stability mandate. In the near term, the extension/ setting of capital requirements should be streamlined, without the requirement for government approval. There is scope to strengthen the corporate governance framework and expectations for banks, and boost prudential supervisory staffing, especially given upcoming regulatory developments.
Keywords:
bank solvency stress tests; insurance solvency stress test; NBB coordination; corporate governance framework; cash flow; B. bank Oversight; market share; Stress testing; Financial sector stability; Insurance companies; Financial Sector Assessment Program; Global; Europe
Cover IMF Staff Country Reports
Finland: Financial Sector Assessment Program-Technical Note on Non-Bank Financial Intermediation and Pension Insurance Companies
International Monetary Fund. Monetary and Capital Markets Department
This technical note evaluates non-bank financial institutions (NBFI) as a sector in Finland, with a special focus on the pension insurance companies (PIC). Pensions, including the PICs and fund managers, are the most significant parts of the NBFI sector, followed by insurance. Market participants value their relationship with the Finnish Financial Supervisory Authority, particularly during crisis periods, but noted that extra resources and expertise would be useful for the NBFI sector. The Financial Sector Assessment Program analysis reveals a history of procyclical and herding behavior in the PIC portfolios due to the substance and perception of the solvency regulations, which drive the behavior of market participants. Discussion on further reforms to the 2017 solvency laws should focus on enhancing the long-term purpose of the PICs to generate returns—to the benefit of all social partners and Finnish citizens. Even though liquidity risks are low, a liquidity regulation should be developed so that PICs have sufficient buffers for extreme events.
Keywords:
PIC equity investment; PIC asset allocation; Pension insurance company; pension insurance company Market; FSAP's finding; finance disclosure Regulation; investment allocation; Pension spending; Solvency; Pensions; Insurance companies; Insurance; Global; Europe
Cover IMF Staff Country Reports
Germany: Financial System Stability Assessment
International Monetary Fund. Monetary and Capital Markets Department
This paper reviews Germany’s Financial System Stability Assessment report. The financial sector has weathered the impact of the pandemic and the war in Ukraine relatively well so far, but risks remain elevated. The Financial System Assessment Program (FSAP) solvency stress tests show that the significant institutions and less significant institutions are overall resilient to an adverse scenario. The main risks to financial stability relate to a global resurgence of coronavirus disease 2019 with extended supply chain disruptions, a scarcity of gas and oil, and de-anchoring of inflation expectations in the United States and advanced Europe. Consistent with the authorities’ findings, the FSAP found small vulnerabilities from climate transition risks to the banking system. Macroprudential policy is being tightened but rising cyclical vulnerabilities will require additional action. Good progress had been made in strengthening the microprudential frameworks for banking and insurance since the 2016 FSAP. The system of Deposit Guarantee Schemes/Institutional Protection Schemes needs reform, which should be informed by a review of the distortions resulting from depositors’ high level of protection guaranteed under the current regime.
Keywords:
FSAP solvency stress tests; mission to Germany; risk pooling; assessment Program; coverage ratio; bank Contagion analysis; liquidity backstop; FSAP bank contagion analysis; Financial Sector Assessment Program; Commercial banks; Stress testing; Cooperative banks; Insurance companies; Global; Europe
Cover IMF Staff Country Reports
Ireland: Financial System Stability Assessment
International Monetary Fund. Monetary and Capital Markets Department
This Financial System Stability Assessment paper highlights that the Irish financial system has grown rapidly and in complexity, especially after Brexit, and Ireland has become a European base for large financial groups. Risks to financial stability emanate from a much larger and more complex financial system, persistent legacy issues, as well as emergent ones from non-bank lending, Fintech, and climate change. Stress tests confirmed banks’ resilience to severe macrofinancial shocks, with some caveats. While broadly adequate, supervisory resources and capacity need to keep pace with a growing and more complex sector with significant cross-border linkages. Efforts are needed to further strengthen supervision of banks’ credit risk and develop capacity and skills on new areas such as climate, non-bank lending, and Fintech. Insurance oversight should prioritize intra-group complexities. Resolution and crisis management can be enhanced through greater planning and collaboration between the Central Bank and the Department of Finance to bolster the ability to deal effectively with institution failures and systemic crises.
Keywords:
insurance sector liquidity risk analysis; G. insurance sector solvency; MBF sector; banking sector Stress Testing Matrix; C. banking sector solvency; Commercial banks; Financial Sector Assessment Program; Foreign banks; Insurance companies; Global; Europe