## 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](https://www.imf.org/en/publications/cr/issues/2016/12/31/sri-lanka-financial-system-stability-assessment-update-including-reports-on-the-observance-21512)

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## Bibliographic details
- Published: December 17, 2007
- Series: IMF Staff Country Reports
- DOI: https://doi.org/10.5089/9781451823608.002

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### 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.

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## Content in this bundle

- **_cr07383 - Executive Summary**
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_Source: https://www.imf.org/en/publications/cr/issues/2016/12/31/sri-lanka-financial-system-stability-assessment-update-including-reports-on-the-observance-21512_