The Central Bank of Barbados (Bank) and the Financial Services Commission (FSC) today released the 2013 Financial Stability Report (FSR), which shows that the domestic financial system remains robust.
The FSR, which is produced by the Bank and the FSC provides a comprehensive overview of trends, developments and the key risks in the domestic financial system.
The Bank and the FSC said that stress tests conducted on the key vulnerabilities in the sector, revealed a resilient and stable financial services industry, despite declining profitability, and the contraction of viable investment projects occasioned by a weakening economic climate.
The report further stated that the financial services sector adequately maintained capital buffers well in excess of the prudential requirement. The added benefit associated with strong parents further supports the stability of the sector.
The 2013 document assessed a range of financial stability indicators for commercial banks, trust and finance houses, credit unions, and insurance companies, as well as balance sheet and income and expenditure trends. For the banking system, financial forecasts are used to project expectations for capital adequacy and the quality of credit. Progressive stress tests were also used to test for possible contagion among banks, and banks??? exposures to financial institutions abroad.
The report???s findings are similar to the independently derived Financial Sector Stability Assessment (FSSA) conducted by a joint IMF/ World Bank team in 2013. The FSSA also concluded that the financial system would remain robust, except in the case of extreme economic shocks.
The report also noted that since 2008, regulators have upgraded legislation and updated guidelines to ensure that the financial services sector was operating in line with international best practices.???Regulations and cross border monitoring of the financial sector were further strengthened by continued exchanges between the regional and international supervisors,??? the Bank and FSC noted.
The Bank and FSC, in thanking all those involved in the production of the document, said they would continue in their efforts to promote the general stability of the financial system.
The 2013 Financial Stability Report (FSR) may be downloaded by clicking here.