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MF: ARMENIA'S BANKING SYSTEM PROVED RESILIENT TO THE FINANCIAL CRISIS
http://www.armradio.am/en/2013/01/17/8671/
10:38 17.01.2013
The banking system of Armenia proved resilient to the financial crisis
and the severe exchange rate depreciation and GDP contraction of 2009,
says the International Monetary Fund (IMF) in an assessment of the
country's financial sector, published on January 11, 2013.
The resilience is in part due to the low level of intermediation and
exposure to key sectors such as construction, but also because of
swift efforts on the part of the authorities to provide support to the
banking sector. Stress tests show that banks would be resilient to a
repeated shock, although there are some heightened vulnerabilities,
according to the IMF's Financial Sector Stability Assessment Program
(FSAP) Update for Armenia.
"The authorities show considerable commitment to embedding strong
supervision as an expectation in Armenia," said Jennifer Elliott,
FSAP mission chief. "Further work on deepening understanding of
individual banks' risk profiles and some additional reporting from
banks would be a continuation of their progress." The system remains
broadly appropriate for the level of development but additions will
be required as the financial system develops.
The country however remains vulnerable to a current account shock,
according to the assessment. The authorities are engaged in further
action that could be taken to protect the banking sector, including
the introduction of a liquidity coverage ratio in foreign currency to
ensure sufficient liquidity for the high level of dollar deposits and
are developing more robust monitoring of foreign currency exposures
of borrowers, because foreign currency lending generates significant
credit risk.
The authorities have already taken steps, since the FSAP mission,
to strengthen the crisis management framework concluding a Memorandum
of Understanding between the central bank and Ministry of Finance.
From: A. Papazian
http://www.armradio.am/en/2013/01/17/8671/
10:38 17.01.2013
The banking system of Armenia proved resilient to the financial crisis
and the severe exchange rate depreciation and GDP contraction of 2009,
says the International Monetary Fund (IMF) in an assessment of the
country's financial sector, published on January 11, 2013.
The resilience is in part due to the low level of intermediation and
exposure to key sectors such as construction, but also because of
swift efforts on the part of the authorities to provide support to the
banking sector. Stress tests show that banks would be resilient to a
repeated shock, although there are some heightened vulnerabilities,
according to the IMF's Financial Sector Stability Assessment Program
(FSAP) Update for Armenia.
"The authorities show considerable commitment to embedding strong
supervision as an expectation in Armenia," said Jennifer Elliott,
FSAP mission chief. "Further work on deepening understanding of
individual banks' risk profiles and some additional reporting from
banks would be a continuation of their progress." The system remains
broadly appropriate for the level of development but additions will
be required as the financial system develops.
The country however remains vulnerable to a current account shock,
according to the assessment. The authorities are engaged in further
action that could be taken to protect the banking sector, including
the introduction of a liquidity coverage ratio in foreign currency to
ensure sufficient liquidity for the high level of dollar deposits and
are developing more robust monitoring of foreign currency exposures
of borrowers, because foreign currency lending generates significant
credit risk.
The authorities have already taken steps, since the FSAP mission,
to strengthen the crisis management framework concluding a Memorandum
of Understanding between the central bank and Ministry of Finance.
From: A. Papazian