{
  "title": "The Bahamas: Financial System Stability Assessment",
  "publication": "IMF Staff Country Reports, July 1, 2019",
  "sourceUrl": "https://www.imf.org/en/publications/cr/issues/2019/07/02/the-bahamas-financial-system-stability-assessment-47068",
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  "summary": "The Bahamas appears to be resilient to current threats to its financial stability, but action is needed to safeguard against potential weaknesses.",
  "sections": [
    {
      "heading": "Executive summary and systemic assessment",
      "content": "- The Bahamas appears to be resilient to current threats to its financial stability, but action is needed to safeguard against potential weaknesses.\n- There is a large stock of problem assets that needs to be dealt with from a variety of perspectives: systemic risk monitoring, banking supervision, and crisis management.\n- Vulnerabilities to natural disasters and external economic contagion heighten the need to address problem assets and systemic weaknesses.\n- The banking sector dominates the financial system and has focused on residential mortgages and consumer loans during a long period of economic stagnation.\n- Despite poor growth the sector has remained profitable.\n- The small domestic residential property market backing most secured lending is prone to shocks and illiquidity.\n- High and persistent levels of nonperforming loans (NPLs) have historically occurred, significantly increasing uncertainty and fragility in the banking system."
    },
    {
      "heading": "Key findings and risks",
      "content": "- Large stock of problem assets requiring coordinated responses across:\n  - Systemic risk monitoring\n  - Banking supervision\n  - Crisis management\n- Concentration risks:\n  - Banking sector concentrated in residential mortgages and consumer loans\n  - Domestic residential property market is small, prone to shocks, and illiquid\n- External and environmental vulnerabilities:\n  - Exposure to natural disasters\n  - Exposure to external economic contagion\n- Asset quality and stability:\n  - Historically high and persistent NPLs create significant uncertainty and fragility\n- Profitability vs. fragility:\n  - Banks have remained profitable despite prolonged poor economic growth, masking underlying asset-quality risks"
    },
    {
      "heading": "Policy implications and recommended focus areas",
      "content": "- Strengthen systemic risk monitoring to identify and track the large stock of problem assets.\n- Reinforce banking supervision to address concentrated exposures to residential mortgages and consumer loans.\n- Enhance crisis management frameworks to handle shocks amplified by an illiquid domestic property market.\n- Incorporate natural disaster and external contagion scenarios into stress testing and contingency planning.\n- Develop strategies to resolve or mitigate high and persistent nonperforming loans to reduce uncertainty and fragility in the banking system.\n\n---\n\n Content in this bundle\n\n- The Bahamas: Financial System Stability Assessment; IMF Country Report No. 19/199; May 16, 2019\n  - The Bahamas: Financial System Stability Assessment; IMF Country Report No. 19/199; May 16, 2019 (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - The Bahamas: Financial System Stability Assessment; IMF Country Report No. 19/199; May 16, 2019 (PDF){rel=\"external\" type=\"application/pdf\"}"
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    "Published: July 1, 2019",
    "Series: IMF Staff Country Reports",
    "DOI: https://doi.org/10.5089/9781498323277.002",
    "The Bahamas appears to be resilient to current threats to its financial stability, but action is needed to safeguard against potential weaknesses.",
    "There is a large stock of problem assets that needs to be dealt with from a variety of perspectives: systemic risk monitoring, banking supervision, and crisis management.",
    "Vulnerabilities to natural disasters and external economic contagion heighten the need to address problem assets and systemic weaknesses.",
    "The banking sector dominates the financial system and has focused on residential mortgages and consumer loans during a long period of economic stagnation.",
    "Despite poor growth the sector has remained profitable.",
    "The small domestic residential property market backing most secured lending is prone to shocks and illiquidity.",
    "High and persistent levels of nonperforming loans (NPLs) have historically occurred, significantly increasing uncertainty and fragility in the banking system.",
    "Large stock of problem assets requiring coordinated responses across:",
    "Concentration risks:",
    "External and environmental vulnerabilities:",
    "Asset quality and stability:",
    "Profitability vs. fragility:",
    "Strengthen systemic risk monitoring to identify and track the large stock of problem assets.",
    "Reinforce banking supervision to address concentrated exposures to residential mortgages and consumer loans.",
    "Enhance crisis management frameworks to handle shocks amplified by an illiquid domestic property market.",
    "Incorporate natural disaster and external contagion scenarios into stress testing and contingency planning.",
    "Develop strategies to resolve or mitigate high and persistent nonperforming loans to reduce uncertainty and fragility in the banking system.",
    "**The Bahamas: Financial System Stability Assessment; IMF Country Report No. 19/199; May 16, 2019**"
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