IMF Reports on the 2017 Article IV Consultation with Jordan
IMF published its staff report and selected issues report in the context of the 2017 Article IV consultation with Jordan. Directors welcomed ongoing reforms to preserve the resilience of financial sector. The notable reforms include gradual adoption of Basel III and the decision to complement it with an additional capital buffer. These steps, along with the high levels of capitalization of banks, will provide buffers to deal with a broad range of shocks.
The staff report reveals that the banking system remains well-capitalized, profitable, and robust to shocks. The capital adequacy ratio, at 19%, is well above the regulatory minimum of 12%. Banks enjoy healthy profitability and have built up provisions while non-performing loans have been gradually declining, partly reflecting write-offs and restructuring. Further progress is being made to strengthen the financial sector supervision. The Central Bank of Jordan (CBJ) issued Basel III regulations on capital requirements in November 2016. It is now finalizing the regulations on domestic systemically important banks and, as a first step toward issuing the regulations on liquidity, has conducted a quantitative impact study of liquidity coverage ratios. The CBJ is confident that the banks’ capital and liquidity buffers will allow them to smoothly meet the new requirements. The gradual move to Basel III, along with the authorities’ decision to complement it with a 1.5% capital buffer, will help bolster further the sector’s resilience. The transfer to the CBJ of the supervision of the insurance sector is now expected to be finalized in early 2018. Efforts to strengthen the AML/CFT framework are gradually shifting from improved regulations to more effective implementation. All in all, the staff encourages the authorities to consider an update to the 2008 Financial Sector Assessment Program (FSAP) within the next two years.
The selected issues report discusses several topics such as the macroeconomic impact of the Syrian refugee crisis and regional conflicts on Jordan; balance sheet analysis of the Jordanian economy to identify potential financial vulnerabilities; and potential reforms needed in the context of the strategy to accelerate financial inclusion in Jordan.
Related Links
Keywords: Middle East, Jordan, Banking, Insurance, Basel III, FSAP, Article IV, IMF
Featured Experts
María Cañamero
Skilled market researcher; growth strategist; successful go-to-market campaign developer
Nicolas Degruson
Works with financial institutions, regulatory experts, business analysts, product managers, and software engineers to drive regulatory solutions across the globe.
Patrycja Oleksza
Applies proficiency and knowledge to regulatory capital and reporting analysis and coordinates business and product strategies in the banking technology area
Previous Article
Bank of Finland Publishes AnaCredit Updates in January 2018Next Article
APRA Outlines its Policy Priorities for 2018Related Articles
BIS and Central Banks Experiment with GenAI to Assess Climate Risks
A recent report from the Bank for International Settlements (BIS) Innovation Hub details Project Gaia, a collaboration between the BIS Innovation Hub Eurosystem Center and certain central banks in Europe
Nearly 25% G-SIBs Commit to Adopting TNFD Nature-Related Disclosures
Nature-related risks are increasing in severity and frequency, affecting businesses, capital providers, financial systems, and economies.
Singapore to Mandate Climate Disclosures from FY2025
Singapore recently took a significant step toward turning climate ambition into action, with the introduction of mandatory climate-related disclosures for listed and large non-listed companies
SEC Finalizes Climate-Related Disclosures Rule
The U.S. Securities and Exchange Commission (SEC) has finalized the long-awaited rule that mandates climate-related disclosures for domestic and foreign publicly listed companies in the U.S.
EBA Proposes Standards Related to Standardized Credit Risk Approach
The European Banking Authority (EBA) has been taking significant steps toward implementing the Basel III framework and strengthening the regulatory framework for credit institutions in the EU
US Regulators Release Stress Test Scenarios for Banks
The U.S. regulators recently released baseline and severely adverse scenarios, along with other details, for stress testing the banks in 2024. The relevant U.S. banking regulators are the Federal Reserve Bank (FED), the Federal Deposit Insurance Corporation (FDIC), and the Office of the Comptroller of the Currency (OCC).
Asian Governments Aim for Interoperability in AI Governance Frameworks
The regulatory landscape for artificial intelligence (AI), including the generative kind, is evolving rapidly, with governments and regulators aiming to address the challenges and opportunities presented by this transformative technology.
EBA Proposes Operational Risk Standards Under Final Basel III Package
The European Union (EU) has been working on the final elements of Basel III standards, with endorsement of the Banking Package and the publication of the European Banking Authority (EBA) roadmap on Basel III implementation in December 2023.
EFRAG Proposes XBRL Taxonomy and Standard for Listed SMEs Under ESRS
The European Financial Reporting Advisory Group (EFRAG), which plays a crucial role in shaping corporate reporting standards in European Union (EU), is seeking comments, until May 21, 2024, on the Exposure Draft ESRS for listed SMEs.
ECB to Expand Climate Change Work in 2024-2025
Banking regulators worldwide are increasingly focusing on addressing, monitoring, and supervising the institutions' exposure to climate and environmental risks.
