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Kingdom of the Netherlands-Aruba: Technical Assistance Report-Financial Stability Diagnostic and Scoping Mission
Author:
International Monetary Fund. Western Hemisphere Dept.
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Series:
IMF Staff Country Reports
Volume/Issue:
Volume 2023: Issue 170
Language:
English
Publication Date:
19 May 2023
DOI:
https://doi.org/10.5089/9798400242885.002
ISBN:
9798400242885
ISSN:
1934-7685
Pages:
27
Keywords:
CARTAC mission; staff team of the International Monetary Fund; bank FIS; mortgage bank; bank data; c. CBA; lending portfolio; Financial sector stability; Mortgages; Commercial banks; Housing prices; Loans; Caribbean
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This technical assistance report on Aruba highlights the financial stability diagnostic and scoping mission. The economy of Aruba is tourist dependent, which is an important source of vulnerability. The major source of risk comes from lending. Banks are increasingly exposed to the real estate market and compete with nonregulated lenders. Residential house prices have increased significantly in some regions since the start of the pandemic driven by strong demand from nonresidential buyers as well as higher construction costs due to coronavirus disease-related supply constraints. The future Financial Stability Department (FSD) is advised to develop a strategy on Macroprudential Policy (MaP). Based on the macroprudential strategy, the FSD should prepare the methodology for the introduction of the MaP instruments chosen as well as ensure the necessary preparations in terms of data collection for this purpose. The data available to the Central Bank of Aruba is sufficient for starting systemic risk monitoring, but some data gaps should be addressed. The monitoring of systemic risk and the development of macroprudential tools requires more granular, frequent, and timely data.
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Cover IMF Staff Country Reports
IMF Staff Country Reports
ISSN:
1934-7685
Publisher:
International Monetary Fund