FSSC confident in stability of Jamaica's macroeconomic environment
The Financial System Stability Committee (FSSC) has expressed that it is confident that threats to the local financial system remain tempered within the context of a generally favourable domestic macroeconomic environment.
The FSSC said it arrived at its position at a meeting on October 30, and after reviewing the Bank of Jamaica’s (BOJ) June 2019 Macroprudential Policy Report.
The FSSC acknowledged that Jamaica’s economic growth is expected to slow and that there are headwinds from the global economy. However, it said the BOJ’s “stress tests show that the Jamaican financial system is resilient to macroeconomic and financial shocks.
“The regulated financial institutions have adequate capital and other key indicators of financial soundness, such as profitability and liquidity, have remained relatively stable,” the FSSC said.
“Of note is the continued reduction in the Government of Jamaica’s footprint in the domestic debt market, the continued accommodative monetary policy and the associated increase in credit issued to households and businesses by banks,” the FSSC added.
It said that while non-performing loans as a share of total loans provided by banks to the private sector is low and declining, it continues to monitor the debt sustainability of borrowers.
The FSSC also noted that the central bank’s analysis shows that despite the interconnected nature of financial institutions, the financial sector is generally resilient to adverse developments in any one entity.
“The FSSC will continue its regular review of financial system stability assessments and make recommendations to assist in the execution of Bank of Jamaica’s financial system stability mandate. The FSSC expects to make its next public statement on these and other emerging issues in March 2020,” the statement said.
The FSSC is a statutory committee established under section 34H of the Bank of Jamaica Act.
Its job includes reviewing developments in the financial system and the economic environment, advising on macroprudential policy and engaging with stakeholders, while providing oversight of financial stability assessments prepared by BOJ staff.