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
BIS Innovation Hub published the work program for 2021, with focus on suptech and regtech, next-generation financial market infrastructure, central bank digital currencies, open finance, green finance, and cyber security.
In an article published by SRB, Mairead McGuinness, the European Commissioner for Financial Services, Financial Stability, and Capital Markets Union, discussed the progress and next steps toward completion of the Banking Union.
EBA finalized the two sets of draft regulatory technical standards on the identification of material risk-takers and on the classes of instruments used for remuneration under the Investment Firms Directive (IFD).
EC published, in the Official Journal of the European Union, a notification that the European Court of Auditors (ECA) has published a special report on resolution planning in the Single Resolution Mechanism.
BoE published a scenario against which it will be stress testing banks in 2021, in addition to setting out the key elements of the 2021 stress test, guidance on the 2021 stress test, and the variable paths for the 2021 stress test.
PRA published a consultation paper (CP3/21) proposes rules regarding the timing of identity verification required for eligibility of depositor protection under the Financial Services Compensation Scheme (FSCS).
FSB published the work program for 2021, which reflects a strategic shift in priorities in the COVID-19 environment.
FCA announced that 50% firms have started using the new data collection platform RegData, which is slated to replace the existing platform known Gabriel.
Bundesbank published Version 5.0 of the derivation rules for completeness check at the form level, with respect to the data quality of the European harmonized reporting system.
FED finalized a rule that updates capital planning requirements to reflect the new framework from 2019 that sorts large banks into categories, with requirements that are tailored to the risks of each category.