General Information & Client Service
  • Americas: +1.212.553.1653
  • Asia: +852.3551.3077
  • China: +86.10.6319.6580
  • EMEA: +44.20.7772.5454
  • Japan: +81.3.5408.4100
Media Relations
  • New York: +1.212.553.0376
  • London: +44.20.7772.5456
  • Hong Kong: +852.3758.1350
  • Tokyo: +813.5408.4110
  • Sydney: +61.2.9270.8141
  • Mexico City: +001.888.779.5833
  • Buenos Aires: +0800.666.3506
  • São Paulo: +0800.891.2518
October 24, 2018

IMF published its staff report under the 2018 Article IV consultation with Dominican Republic. The report highlights that efforts to strengthen financial sector oversight will enable the financial system to continue supporting strong and inclusive growth. The ongoing emphasis on strengthening oversight over systemic macro-financial risks will further contribute to financial stability. Continued efforts to improve prudential regulation and supervision will complement these reforms, with the objective of fully aligning the regulatory and supervisory framework with international best practices.

The staff report reveals that the financial sector has emerged stronger and better supervised than before the 2003–04 financial crisis. The strengthening of banking supervision and prudential regulations, and monitoring by the Monetary Board, of relevant financial sector developments have also enhanced bank soundness indicators: when compared against its regional peers, the Dominican Republic stands high on all key bank soundness indicators, including solvency, asset quality, and profitability. The report states that non-performing loans (NPLs) increased by about 0.2 percentage points from a year earlier, given the deceleration in economic activity in mid-2017; however, at 1.9% for commercial banks, NPLs remain relatively low and appear overall adequately provisioned.

Ongoing efforts to continue improving prudential supervision and regulation should help to address the risks, but should be complemented with additional efforts. The authorities are considering regulatory changes to liquidity, leverage, and market risk management requirements in 2018 to better align them to international practice. They should also prepare for the eventual adoption of International Financial Reporting Standards (IFRS) 9 through a carefully timed and planned strategy that takes into account the impact on banks. The existing supervisory and regulatory framework may also need to be enhanced to strengthen assessment of intercompany activities, give supervisors adequate powers to require higher capitalization for individual banks, and align the banking law more fully to international standards, following lessons learned in the consolidation process since the 2003–04 crisis. 

The IMF assessment found that systemic risk oversight is being strengthened and macro-prudential policies should be developed in tandem. The central bank has set up a committee responsible for financial stability and macro-prudential policy, which will include a representative from the Superintendency of Banks. The committee is now formally responsible for systemic risk assessment and financial stability, and is working to strengthen systemic oversight and develop macro-prudential policy instruments to fulfill its mandate. Progress has been made to strengthen systemic risk assessment, which would be further enhanced through publication of a financial stability report. Addressing data gaps with respect to sectoral risks will be also be critical to strengthening systemic risk assessment and would enhance lenders’ ability to assess borrower credit risk, thus contributing to financial stability ex ante. Anti-money laundering and combating the financing of terrorism (AML/CFT) law finalized in 2017 will help strengthen technical compliance with international standards. The Dominican Republic is undergoing an assessment of its compliance with the 2012 FATF standard, which will be concluded in mid-2018. Advancing further on effective implementation of international AML/CFT standards will be essential to continued mitigation of risks stemming from the withdrawal of correspondent banking relationships.


Related Link: Staff Report

Keywords: Americas, Dominican Republic, Banking, Systemic Risk, Macro-prudential Policy, Financial Stability, IFRS 9, AML/CFT, Article IV, IMF

Related Articles

FASB Issues Minor Improvements to Financial Instruments Standards

FASB issued an Accounting Standards Update (ASU No. 2019-04) that clarifies and improves areas of guidance related to the recently issued standards on credit losses (Topic 326), derivatives and hedging (Topic 815), and recognition and measurement of financial instruments (Topic 825).

April 25, 2019 WebPage Regulatory News

APRA Grants License to New Authorized Deposit-Taking Institution

APRA announced that it has granted Judo Bank Pty Ltd a license to operate as an authorized deposit-taking institution without restrictions, under the Banking Act 1959.

April 24, 2019 WebPage Regulatory News

BoE Report on Evaluation of Approach to Concurrent Stress Testing

BoE published a report on the evaluation, by the Independent Evaluation Office (IEO), of the effectiveness of the approach of BoE to concurrent stress testing.

April 24, 2019 WebPage Regulatory News

FDIC Consults on Approach to Resolution Planning for IDIs

FDIC approved an Advance Notice of Proposed Rulemaking (ANPR) and is seeking comment on ways to tailor and improve its rule requiring certain insured depository institutions (IDIs) to submit resolution plans.

April 22, 2019 WebPage Regulatory News

FDIC Specifies Submission Timeline for FFIEC 031, 041, and 051 Reports

FDIC published the financial institution letters (FIL-21-2019 and FIL-22-2019) that offer guidance on submission of Call Reports FFIEC 051, FFIEC 041, and FFIEC 031 for the first quarter of 2019.

April 19, 2019 WebPage Regulatory News

US Agencies Propose to Revise Call Reports FFIEC 031, 041, and 051

US Agencies (FDIC, FED, and OCC) proposed to revise and extend, for three years, the Call Reports FFIEC 031, FFIEC 041, and FFIEC 051.

April 19, 2019 WebPage Regulatory News

US Agencies Propose to Amend Rule on Supplementary Leverage Ratio

US Agencies (FDIC, FED, and OCC) are proposing to revise the capital requirements for supplementary leverage ratio, as required by the Economic Growth, Regulatory Relief, and Consumer Protection (EGRRCP) Act.

April 18, 2019 WebPage Regulatory News

EIOPA Held InsurTech Roundtable on Use of Cloud Computing by Insurers

EIOPA had, on April 11, 2019, hosted its Fourth InsurTech Roundtable on the use of cloud computing by insurance undertakings.

April 17, 2019 WebPage Regulatory News

EP Resolution on Proposal for Sovereign Bond Backed Securities

The European Parliament (EP) published adopted text on the proposal for a regulation of the European Parliament and of the Council on sovereign bond-backed securities (SBBS).

April 16, 2019 WebPage Regulatory News

HKMA Decides to Maintain Countercyclical Capital Buffer at 2.5%

HKMA announced that, in accordance with the Banking (Capital) Rules, the countercyclical capital buffer (CCyB) ratio for Hong Kong remains at 2.5%.

April 16, 2019 WebPage Regulatory News
RESULTS 1 - 10 OF 2957