## Maldives: Financial Sector Assessment Program-Technical Note on Macroprudential Policy

_IMF Staff Country Reports, January 19, 2024_

## Source details

**Canonical URL:** [Maldives: Financial Sector Assessment Program-Technical Note on Macroprudential Policy](https://www.imf.org/en/publications/cr/issues/2024/01/19/maldives-financial-sector-assessment-program-technical-note-on-macroprudential-policy-543932)

## Other formats

- [Markdown version](/en/publications/cr/issues/2024/01/19/maldives-financial-sector-assessment-program-technical-note-on-macroprudential-policy-543932/index.md)
- [Structured JSON version](/en/publications/cr/issues/2024/01/19/maldives-financial-sector-assessment-program-technical-note-on-macroprudential-policy-543932/index.json)
- [Bundle manifest](/en/publications/cr/issues/2024/01/19/maldives-financial-sector-assessment-program-technical-note-on-macroprudential-policy-543932/bundle-manifest.json)

## Bibliographic details
- Published: January 19, 2024
- Series: IMF Staff Country Reports
- DOI: https://doi.org/10.5089/9798400266430.002

---

### Key findings
- Creation of a macroprudential committee with a clear mandate and decision-making powers is recommended.
- The committee should rely on a well-resourced financial stability unit to act as a secretariat and provide data-driven recommendations.
- The Maldives Monetary Authority (MMA) needs to develop a set of early warning indicators and further develop its macroprudential toolkit.
- A comprehensive dashboard of both broad-based and sectoral indicators would help monitor systemic risks.
- Indicators to consider for implementation include credit, real-estate development, corporate performance, and household indebtedness.
- Introduction of several key macroprudential instruments would help prevent the emergence of systemic risk.
- MMA should follow through on its plan to introduce two household-related instruments.
- The Financial Sector Assessment Program team recommends developing additional instruments to:
  - safeguard bank liquidity, and
  - reduce the currency mismatch of banks,
  as well as adopt other instruments recommended by the Basel Committee on Banking Supervision.

### Policy recommendations
- Establish a macroprudential committee with explicit mandate and decision-making authority.
- Resource and staff a financial stability unit to serve as the committee’s secretariat and to prepare data-driven policy recommendations.
- Create and maintain a comprehensive dashboard combining broad-based and sectoral early warning indicators.
- Implement household-related macroprudential instruments as planned by MMA.
- Develop liquidity-focused macroprudential instruments to safeguard bank liquidity.
- Introduce measures to reduce banks’ currency mismatch consistent with Basel Committee recommendations.
- Expand MMA’s overall macroprudential toolkit in line with international best practices.

### Suggested indicators and monitoring
- Broad-based indicators:
  - Credit indicators
  - Real-estate development indicators
  - Corporate performance indicators
  - Household indebtedness indicators
- Sectoral indicators: (to be included in the comprehensive dashboard alongside broad-based indicators)

### Implementation priorities and sequencing
- Immediate: Establish committee, staff the financial stability unit, and begin producing data-driven recommendations.
- Near-term: Create the dashboard and a set of early warning indicators.
- Short- to medium-term: Introduce the two planned household-related instruments.
- Medium-term: Develop liquidity protection instruments and measures to reduce currency mismatch; adopt additional Basel Committee–recommended instruments.

*International Monetary Fund. Maldives: Financial Sector Assessment Program-Technical Note on Macroprudential Policy, January 19, 2024.*

---

## Content in this bundle

- **IMF FSAP Technical Note — Maldives**
  - [IMF FSAP Technical Note — Maldives (Markdown version)](/-/media/files/publications/cr/2024/english/1mdvea2024003.pdf.md){rel="alternate" type="text/markdown"}
  - [IMF FSAP Technical Note — Maldives (PDF)](/-/media/files/publications/cr/2024/english/1mdvea2024003.pdf){rel="external" type="application/pdf"}

---

_Source: https://www.imf.org/en/publications/cr/issues/2024/01/19/maldives-financial-sector-assessment-program-technical-note-on-macroprudential-policy-543932_