Sri Lanka: Financial System Stability Assessment: Update, including Reports on the Observance of Standards and Codes on the following topics: Banking Supervision and Payment Systems
IMF Staff Country Reports, December 17, 2007
Source details
- Canonical URL
- Sri Lanka: Financial System Stability Assessment: Update, including Reports on the Observance of Standards and Codes on the following topics: Banking Supervision and Payment Systems
Other formats
Bibliographic details
- Published: December 17, 2007
- Series: IMF Staff Country Reports
- DOI: https://doi.org/10.5089/9781451823608.002
Summary and overall assessment
- This paper presents an update to the Financial System Stability Assessment on Sri Lanka.
- Despite a challenging macroeconomic environment characterized by a high fiscal deficit, inflationary pressures, and a widening current account, near-term risks to the financial system appear manageable.
- Financial soundness indicators have improved.
- Stress tests suggest that banks remain relatively less resilient to interest rate and liquidity shocks.
- The system faces challenges over the medium term from continued rapid credit growth, rising interest rates, and rigidities in interbank markets.
Key findings and risks
- Near-term financial system risks: manageable despite macroeconomic challenges.
- Bank resilience: stress tests indicate relative vulnerability to interest rate shocks and liquidity shocks.
- Medium-term challenges:
- Continued rapid credit growth.
- Rising interest rates.
- Rigidities in interbank markets.
Subject coverage and keywords
- Subject areas: Banking, Capital adequacy requirements, Commercial banks, Credit, Credit risk, Financial institutions, Financial regulation and supervision, Insurance, Insurance companies, Money, Pensions.
- Keywords include: Asia and Pacific, bank, bank borrowing, bank exposure, CBSL, central bank, Commercial banks, CR, Credit, credit risk, exchange-earning corporate, exposure to the government, Insurance, Insurance companies, interest rate, ISCR, RTGS security objective, securities.
Content in this bundle
- _cr07383 - Executive Summary