Consultative group meeting: SBP governor calls for limiting risks to financial system
Stresses need for implementing macroprudential policy framework
The SBP announces the target rate every two months, which serves as the benchmark interest rate for overnight funds in the interbank market. PHOTO: FILE
KARACHI:
State Bank of Pakistan (SBP) Governor Ashraf Mahmood Wathra has emphasised the need for implementing the macroprudential policy framework in line with international best practices to limit systemic risks facing the financial system.
He said this during a meeting of the Financial Stability Board (FSB) Regional Consultative Group (RCG) Asia, held in Hong Kong on Friday, according to a press release.
Wathra, who was co-chairing the 11th meeting of the FSB RCG Asia alongside Hong Kong Monetary Authority Chief Executive Norman TL Chan, said the macroprudential policy needed to be complemented by appropriate monetary, fiscal and other financial policies.
In July 2015, Wathra was appointed co-chair of the FSB RCG Asia along with Norman for a two-year term. They are responsible for hosting the consultative group’s meetings, conducting workshops, coordinating with the FSB Secretariat and attending the FSB’s plenary meetings.
The meeting also discussed vulnerabilities and financial stability issues covering high levels of US dollar-denominated private-sector debt, movement in exchange rates and changes in the US monetary policy stance and their potential implications for the region.
During the session on managing non-performing loans (NPLs), the members shared their experiences how financial institutions in Asia were identifying, measuring, monitoring and controlling NPLs, and what legal, regulatory or other hurdles impeded their resolution.
SBP Executive Director Banking Supervision Group Jameel Ahmed briefed the participants on the Basel committee’s consultative document titled “Prudential treatment of problem assets - definitions of non-performing exposures and forbearance”, in addition to sharing Pakistan’s experience in managing problem loans.
The meeting also considered the impact of financial technology on retail payment systems, where members discussed how the proliferation of fintech was improving accessibility and convenience in retail payments, while highlighting increases in credit and operational risks.
The members contemplated appropriate regulatory approaches to foster sound and secure retail payment systems while striking a balance between financial inclusion, customer convenience and financial stability.
The meeting concluded with a session on de-risking and correspondent banking where members were briefed by the Financial Action Task Force on its recently issued guidance on correspondent banking services.
Members also considered solutions, including the need for greater clarity by regulators with respect to their expectations, the implementation by banks of risk-based anti-money laundering/combating the financing of terrorism assessments, the need for international organisations to continue their involvement in correspondent banking and cross-border cooperation among national authorities.
Published in The Express Tribune, December 3rd, 2016.
State Bank of Pakistan (SBP) Governor Ashraf Mahmood Wathra has emphasised the need for implementing the macroprudential policy framework in line with international best practices to limit systemic risks facing the financial system.
He said this during a meeting of the Financial Stability Board (FSB) Regional Consultative Group (RCG) Asia, held in Hong Kong on Friday, according to a press release.
Wathra, who was co-chairing the 11th meeting of the FSB RCG Asia alongside Hong Kong Monetary Authority Chief Executive Norman TL Chan, said the macroprudential policy needed to be complemented by appropriate monetary, fiscal and other financial policies.
In July 2015, Wathra was appointed co-chair of the FSB RCG Asia along with Norman for a two-year term. They are responsible for hosting the consultative group’s meetings, conducting workshops, coordinating with the FSB Secretariat and attending the FSB’s plenary meetings.
The meeting also discussed vulnerabilities and financial stability issues covering high levels of US dollar-denominated private-sector debt, movement in exchange rates and changes in the US monetary policy stance and their potential implications for the region.
During the session on managing non-performing loans (NPLs), the members shared their experiences how financial institutions in Asia were identifying, measuring, monitoring and controlling NPLs, and what legal, regulatory or other hurdles impeded their resolution.
SBP Executive Director Banking Supervision Group Jameel Ahmed briefed the participants on the Basel committee’s consultative document titled “Prudential treatment of problem assets - definitions of non-performing exposures and forbearance”, in addition to sharing Pakistan’s experience in managing problem loans.
The meeting also considered the impact of financial technology on retail payment systems, where members discussed how the proliferation of fintech was improving accessibility and convenience in retail payments, while highlighting increases in credit and operational risks.
The members contemplated appropriate regulatory approaches to foster sound and secure retail payment systems while striking a balance between financial inclusion, customer convenience and financial stability.
The meeting concluded with a session on de-risking and correspondent banking where members were briefed by the Financial Action Task Force on its recently issued guidance on correspondent banking services.
Members also considered solutions, including the need for greater clarity by regulators with respect to their expectations, the implementation by banks of risk-based anti-money laundering/combating the financing of terrorism assessments, the need for international organisations to continue their involvement in correspondent banking and cross-border cooperation among national authorities.
Published in The Express Tribune, December 3rd, 2016.