{
  "title": "Spain: Financial Sector Assessment Program-Technical Note on Systemic Risk Analysis",
  "publication": "IMF Staff Country Reports, August 1, 2024",
  "sourceUrl": "https://www.imf.org/en/publications/cr/issues/2024/08/01/spain-financial-sector-assessment-program-technical-note-on-systemic-risk-analysis-552808",
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  "summary": "This paper focuses on a technical note on systemic risk analysis as part of Financial Sector Assessment Program (FSAP) in Spain.",
  "sections": [
    {
      "heading": "Overview",
      "content": "- Focus: technical note on systemic risk analysis as part of the Financial Sector Assessment Program (FSAP) in Spain.\n- Context: Spain’s economy and its well-developed, bank-dominated financial system have shown resilience through the pandemic, rising global geo-political tensions and tighter financial conditions.\n- Spanish banking sector characteristics: global imprint, traditional business model, and strong profitability.\n- Downside risks are prominent and existing vulnerabilities could amplify the impact of exogenous shocks on financial stability."
    },
    {
      "heading": "Key findings",
      "content": "- The FSAP assessed the Spanish banking and real sectors’ resilience against a severe but plausible adverse scenario that reflects downside risks.\n- The FSAP analysis suggests a moderate rise in the debt-at-risk of the nonfinancial corporates sector in the adverse scenario.\n- Liquidity stress tests show that Significant banking institutions can:\n  - cope comfortably with market valuation shocks, and\n  - face cash flow challenges under large withdrawals of retail deposits.\n- Interconnectedness analysis does not reveal significant vulnerabilities of Spanish banks to of cross-border contagion of foreign banking distress."
    },
    {
      "heading": "Stress testing and scenarios",
      "content": "- Scenario type: severe but plausible adverse scenario reflecting prominent downside risks and existing vulnerabilities.\n- Nonfinancial corporates: moderate rise in debt-at-risk in the adverse scenario.\n- Liquidity tests:\n  - Market valuation shocks: Significant banking institutions can cope comfortably.\n  - Large retail deposit withdrawals: Significant banking institutions would face cash flow challenges."
    },
    {
      "heading": "Interconnectedness analysis",
      "content": "- Conclusion: no significant vulnerabilities detected of Spanish banks to cross-border contagion of foreign banking distress."
    },
    {
      "heading": "Subjects and keywords",
      "content": "- Subject: Credit, Financial institutions, Financial regulation and supervision, Financial sector policy and analysis, Income, Liquidity requirements, Loans, Money, National accounts, Stress testing\n- Keywords: banking sector asset composition, banking sector asset quality, Caribbean, Credit, D. liquidity-solvency interaction, Global, IMF approach, Income, Liquidity requirements, Loans, NFC liquidity, solvency stress test result, Stress testing\n\n---\n\n Content in this bundle\n\n- Spain FSAP\n  - Spain FSAP (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - Spain FSAP (PDF){rel=\"external\" type=\"application/pdf\"}"
    }
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    "Published: August 1, 2024",
    "Series: IMF Staff Country Reports",
    "DOI: https://doi.org/10.5089/9798400284342.002",
    "Focus: technical note on systemic risk analysis as part of the Financial Sector Assessment Program (FSAP) in Spain.",
    "Context: Spain’s economy and its well-developed, bank-dominated financial system have shown resilience through the pandemic, rising global geo-political tensions and tighter financial conditions.",
    "Spanish banking sector characteristics: global imprint, traditional business model, and strong profitability.",
    "Downside risks are prominent and existing vulnerabilities could amplify the impact of exogenous shocks on financial stability.",
    "The FSAP assessed the Spanish banking and real sectors’ resilience against a severe but plausible adverse scenario that reflects downside risks.",
    "The FSAP analysis suggests a moderate rise in the debt-at-risk of the nonfinancial corporates sector in the adverse scenario.",
    "Liquidity stress tests show that Significant banking institutions can:",
    "Interconnectedness analysis does not reveal significant vulnerabilities of Spanish banks to of cross-border contagion of foreign banking distress.",
    "Scenario type: severe but plausible adverse scenario reflecting prominent downside risks and existing vulnerabilities.",
    "Nonfinancial corporates: moderate rise in debt-at-risk in the adverse scenario.",
    "Liquidity tests:",
    "Conclusion: no significant vulnerabilities detected of Spanish banks to cross-border contagion of foreign banking distress.",
    "Subject: Credit, Financial institutions, Financial regulation and supervision, Financial sector policy and analysis, Income, Liquidity requirements, Loans, Money, National accounts, Stress testing",
    "Keywords: banking sector asset composition, banking sector asset quality, Caribbean, Credit, D. liquidity-solvency interaction, Global, IMF approach, Income, Liquidity requirements, Loans, NFC liquidity, solvency stress test result, Stress testing",
    "**Spain FSAP**"
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