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Fostering and Promoting Financial Stability
A stable financial system mitigates the potential for undue losses by depositors, policyholders and pension plan members from risks undertaken by banks, insurance companies and pension plans respectively.
The Central Bank promotes the soundness and stability of the financial system through:
- Supervision and Regulation of entities licensed by and registered with the Central Bank;
- Regular assessment of the financial performance of the sector; and
- Maintenance of efficient payment systems.
Supervision and Regulation
The Bank regulates and supervises the banking sector, the non-bank deposit-taking institutions, the insurance industry and private pension plans registered with Board of Inland Revenue, by administering the relevant pieces of legislation.
Assessment of Financial Performance of the Sector
The Bank publishes reports twice annually on its analysis of the financial condition and performance of the financial services sector and the overall level of financial stability. An analysis of macroprudential ratios and a regime of stress testing of the key risks in the sector form the basis of the Bank’s reporting.
Maintenance of Efficient Payment Systems
The Bank is required to license all operators of Payment Systems (other than the Central Bank) and oversee their operations. While the Bank exercises oversight of all payment systems, it focuses particularly on those systems that are deemed to be systemically important. Currently, these are determined to be the cheque clearing system, the local debit card system, LINX, the Automated Clearing House (ACH) and the Real Time Gross Settlement System (RTGS). The Payment System Oversight Framework consists of both on-site and off-site monitoring and focusing on the identification and management of risks.