IMF published, under the Financial Sector Assessment Program (FSAP), three technical notes for the Republic of Poland. The technical notes cover stress testing and systemic risk analysis, insurance sector regulation and supervision, and macro-prudential policy framework.
Technical Note on Stress Testing and Systemic Risk Analysis. For the FSAP, a comprehensive set of stress tests and contagion analysis were conducted to assess resilience of the financial system in Poland. The FSAP risk analysis included solvency stress testing and liquidity stress testing of commercial and cooperative banks as well as interbank, cross-sectoral, and cross-border contagion analysis using both exposure and market data. The FSAP risk analysis also considered the second-round impact of interbank contagion on banks’ solvency positions. The banking system shows resilience to adverse shocks in the aggregate; however, some other systemically important institutions (OSIIs) show weakness. In the adverse case, the solvency ratio for the system (that is, common equity tier one or CET1 ratio) declined from 16.2% to 12.9% of risk-weighted assets, driven by loan-loss provisions, valuation losses on debt securities, and funding interest rate risks. The authorities should sustain supervisory attention toward weaknesses in medium-sized banks and OSIIs, including the affiliating banks of cooperatives networks, given their importance in the banking system.
Technical Note on Macro-Prudential Policy Framework. This technical note evaluates the macro-prudential policy framework in Poland and proposes recommendations. It assesses the institutional framework underpinning macro-prudential policy, the operational capacity of the authorities to pursue such policy effectively, and the experience so far. The note also assesses the present institutional framework and looks at the systemic risk monitoring framework. Finally, it describes the macro-prudential instruments available to the authorities and assesses their application.
Technical Note on Insurance Sector Regulation and Supervision. This technical note assesses and provides an update on regulatory and supervisory developments in the Polish insurance sector since the earlier assessment, which had concluded in 2012. The note focuses on key issues, with reference to international standards but without presenting a detailed assessment of Poland’s observance. As an update to the full assessment of observance of the ICPs of IAIS carried out by the World Bank in 2012, the note focuses on developments such as the implementation of the EU Solvency II framework in Poland from January 01, 2016. The Solvency II changes appear well-embedded, without significant exemptions or transitional arrangements. Requirements for additional reporting and for audit of the key Solvency and Financial Condition Report were added to the Solvency II minimum requirements. Market-wide risk monitoring is conducted (including annual stress testing) and insurance sector issues are considered within the financial sector macro-prudential supervisory framework. The note highlights that most recommendations of the 2012 FSAP insurance assessment have been implemented. The supervision of intermediaries has also been strengthened in line with the 2012 FSAP recommendations and further improvements were expected to take effect in late 2018.
- Note on Stress Testing and Systemic Risk Analysis
- Note on Macro-Prudential Policy Framework
- Note on Insurance Sector Regulation and Supervision
Keywords: Europe, Poland, Banking, Insurance, FSAP, Technical Notes, Stress Testing, Systemic Risk, Macro-Prudential Policy, Solvency II, SFCR, EU, IMF
Previous ArticleIMF Publishes Report on 2019 Article IV Consultation with Macao
APRA updated the lists of the Direct to APRA (D2A) validation and derivation rules for authorized deposit-taking institutions, insurers, and superannuation entities.
EC adopted a package that includes the digital finance and retail payments strategies and the legislative proposals for regulatory frameworks on crypto-assets and digital operational resilience.
ECB published an opinion (CON/2020/22) on proposals for regulations amending the securitization framework of EU, in response to the COVID-19 pandemic.
FCA is consulting on its approach to the authorization and supervision of international firms operating in UK.
MAS published amendments to Notice 637 on the risk-based capital adequacy requirements for reporting banks incorporated in Singapore.
FCA announced that it will move firms to RegData from Gabriel in the coming months in stages, based on the reporting requirements of firms.
ISDA issued a letter to regulators to flag that it now expects the supplement to the 2006 ISDA Definitions and the Interbank Offered Rate (IBOR) Fallbacks Protocol to be effective around mid- to late-January 2021.
APRA has concluded its review of the comprehensive plans of authorized deposit-taking institutions for the assessment and management of loans with repayment deferrals.
ESAs (EBA, EIOPA, and ESMA) published the first joint report that assesses risks in the financial sector since the outbreak of the COVID-19 pandemic.
BoE and HM Treasury confirmed that the COVID Corporate Financing Facility (CCFF) will close for new purchases of commercial paper, with effect from March 23, 2021.