Jordan: Financial Sector Assessment Program-Financial System Stability Assessment

IMF Staff Country Reports, April 21, 2023

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Canonical URL: Jordan: Financial Sector Assessment Program-Financial System Stability Assessment

Focus: financial system stability assessment for Jordan.
Publication date: April 21, 2023.
This paper reports results of the Financial Sector Assessment Program (FSAP) for Jordan and the associated Financial System Stability Assessment.

Jordan’s financial sector is dominated by banks.
The sector has withstood several large external shocks since the latest FSAP conducted in 2008–09, in part thanks to measures implemented by the authorities to enhance the system’s resilience and oversight.
The FSAP’s systemic risk analysis found that Jordan’s banking sector appeared broadly resilient.
Banks would be able to withstand a large global stagflationary shock, if it were to occur, given high levels of system-wide regulatory capital and robust earnings.
The challenging external risk environment highlights the need [for] strengthening the financial stability framework.

Banking supervision approach should be more risk-based and forward-looking.
Pillar 2 supervisory assessments should be developed for more risk-sensitive capital requirements.
The macroprudential framework needs:
- stronger decision-making; and
- a more refined strategy.
Several data gaps should be filled to:
- implement stress tests on a globally consolidated basis;
- run systemic foreign currency liquidity analyses; and
- perform more granular analyses of household and corporate sector vulnerabilities to guide the calibration of borrower-based macroprudential tools.