Countries In The IMF Financial Spotlight In 2020

from the International Monetary Fund

In 2020, the IMF plans to assess the stability of twelve financial systems. Seven assessments are of jurisdictions with systemically important financial sectors (Austria, Denmark, Hong Kong SAR, Italy, Korea, Norway, and the United States), for which it is mandatory to undergo financial stability assessments every five years.

The other five assessments are Algeria, Latvia, Philippines, South Africa, and Trinidad and Tobago, which are being done at the request of those countries themselves. Assessments for advanced economies are done by the IMF alone, while those for other countries are typically carried out jointly with the World Bank.

The Financial Sector Assessment Program (FSAP) has just entered its 20th year. It is now a key pillar of IMF financial surveillance, helping to assess financial vulnerabilities and make financial systems more resilient. The IMF considers country-specific features of financial systems and tailors its analysis to the needs of each member participating in the program. In 2020, the IMF’s Executive Board will review the FSAP, which is done periodically and will cover topics such as analytical foundations, coverage of emerging risks, integration of the FSAP with other IMF surveillance, and country participation in the program.

FSAP assessments expected to conclude in 2020 include the following:

Denmark’s financial system is relatively large reflecting a high degree of interconnectedness between financial institutions, households, and corporates. Key financial vulnerabilities arise from high household debt amid elevated housing valuations, particularly in urban areas. The assessment will analyze the resilience of banks and insurers to adverse macro-financial shocks; evaluate the strength of the oversight of banks and insurance companies; undertake an assessment of the macroprudential and the crisis management frameworks; and assess the effectiveness of the anti-money laundering and counter-financing of terrorism regime, particularly in mitigating related cross-border risks.

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Disclaimer: The views expressed are those of the author(s) and do not necessarily represent the views of the IMF and its Executive Board.

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