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Economic News (Information Agency Oreanda), Russia
January 17, 2013 Thursday
IMF: Armenian Banking System Proves Resilient to Financial Crisis
Yerevan. OREANDA-NEWS . January 17, 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 countrys
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
IMFs 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.
The Financial Sector Assessment Program, established in 1999, is a
comprehensive and in-depth assessment of a countrys financial sector.
To assess the stability of the financial sector, IMF teams examine the
soundness of the banking and other financial sub-sectors; rate the
quality of bank, insurance, payments, and capital market supervision
against accepted international standards; and evaluate the ability of
supervisors, policymakers, and financial safety nets to respond
effectively to a systemic crisis. While FSAPs do not evaluate the
health of individual financial institutions and cannot predict or
prevent financial crises, they identify the main vulnerabilities that
could trigger one.
January 17, 2013 Thursday
IMF: Armenian Banking System Proves Resilient to Financial Crisis
Yerevan. OREANDA-NEWS . January 17, 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 countrys
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
IMFs 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.
The Financial Sector Assessment Program, established in 1999, is a
comprehensive and in-depth assessment of a countrys financial sector.
To assess the stability of the financial sector, IMF teams examine the
soundness of the banking and other financial sub-sectors; rate the
quality of bank, insurance, payments, and capital market supervision
against accepted international standards; and evaluate the ability of
supervisors, policymakers, and financial safety nets to respond
effectively to a systemic crisis. While FSAPs do not evaluate the
health of individual financial institutions and cannot predict or
prevent financial crises, they identify the main vulnerabilities that
could trigger one.