IMF Staff Country Reports

Ecuador: Financial System Stability Assessment

September 21, 2023

Download PDF More Formats on IMF eLibrary Order a Print Copy
More formats on IMF eLibrary Order a Print Copy

Preview Citation

Format: Chicago

International Monetary Fund. Monetary and Capital Markets Department "Ecuador: Financial System Stability Assessment", IMF Staff Country Reports 2023, 335 (2023), accessed October 6, 2024, https://doi.org/10.5089/9798400254208.002

Export Citation

  • ProCite
  • RefWorks
  • Reference Manager
  • BibTex
  • Zotero
  • EndNote

Summary

This paper discusses financial system stability assessment (FSSA) in Ecuador. Banks and credit cooperatives dominate Ecuador’s financial system. While dollarization provides an important anchor for the Ecuadorean economy, systemic liquidity risks are high due to the limited capacity of the central bank to provide liquidity. The financial sector is overall resilient to adverse macrofinancial shocks but some institutions have meaningful solvency and liquidity vulnerabilities. To preserve confidence it is key to enhance capitalization, promptly recognize loan losses, and address unviable institutions. The FSSA concluded that institutional framework for financial sector oversight is complex, uncoordinated, and prone to political intervention. Reforms are needed to enhance supervisory independence, prioritize safety and soundness; separate prudential supervision from other functions, and substantially strengthen the supervisory approach. The macroprudential framework needs further progress by developing stronger financial sector-wide analytical capacity, improving information sharing and coordination, and clarifying the roles between multiple agencies.

Subject: Credit, Financial institutions, Financial regulation and supervision, Financial Sector Assessment Program, Financial sector policy and analysis, International organization, Loans, Monetary policy, Money, State-owned banks

Keywords: B. bank solvency stress tests, Caribbean, Credit, Emergency liquidity assistance facility, Financial Sector Assessment Program, Global, Lender-of-last resort function, Liquidity analysis, Liquidity condition, Liquidity fund, Liquidity vulnerability, Loans, State-owned banks, World Bank FSAP mission

Publication Details

You May Also Be Interested In...

Implications of Central Bank Digital Currency for Monetary Operations

October 4, 2024

Positioning Central Bank Digital Currency in the Payments Landscape

October 2, 2024

Vietnam: Selected Issues

September 27, 2024

Vietnam: 2024 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for Vietnam

September 27, 2024