Curaçao and Sint Maarten: Technical Assistance Report; Financial Stability Report
Technical Assistance Reports, April 4, 2025
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- Curaçao and Sint Maarten: Technical Assistance Report; Financial Stability Report
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Bibliographic details
- Published: April 4, 2025
- Series: Technical Assistance Reports
- DOI: https://doi.org/10.5089/9798229004596.019
Mission and objectives
- CARTAC conducted a technical assistance (TA) mission in Curaçao and Sint Maarten from October 3 to October 12, 2023.
- Primary objectives:
- Support the Central Bank of Curaçao and Sint Maarten (CBCS) in enhancing its Financial Stability Report (FSR).
- Improve financial stability assessments, strengthen the analytical framework, and refine credit risk modeling.
Analytical enhancements and methods introduced
- Reviewed the latest available FSR and identified scope for improvements in structure, analytical depth, and communication strategy.
- Emphasized development of sectoral credit risk models to assess the impact of macroeconomic conditions on non-performing loans (NPLs) and overall financial stability.
- Introduced the Bayesian Model Averaging (BMA) approach to address model uncertainty.
- Provided an initial estimation framework for sectoral credit risk modeling.
- Broader analytical topics covered:
- Stress testing.
- Interconnectedness analysis.
- Integration of financial stability indicators with regulatory frameworks.
- Consideration of emerging risks such as climate and cyber risks.
Key findings and recommended enhancements
- Report content and structure:
- Streamline the text to avoid repetition and focus on key financial stability risks and vulnerabilities.
- Make the analytical toolkit more forward-looking by incorporating stress testing results based on macroeconomic scenarios.
- Credit risk and data:
- Develop sectoral credit risk models to link macroeconomic conditions to NPL dynamics.
- Strengthen CBCS data management by consolidating all financial stability-related data into a centralized data warehouse.
- Explore the feasibility of establishing a credit register for more granular risk assessment.
- Regulatory and indicator communication:
- Provide clearer communication of regulatory frameworks and financial stability indicators across all segments of the financial system, including banks, insurance companies, and pension funds.
- Governance and process:
- Support cross-departmental discussions during FSR development to ensure it serves as the CBCS’s flagship financial stability publication.
Communication and outreach recommendations
- Internal communication:
- Promote the FSR as the CBCS’s flagship financial stability publication, underpinned by cross-departmental development.
- External communication:
- Enhance external communication strategy through press briefings, media interviews, and online dissemination efforts.
- Content coverage:
- Consistently cover emerging risks such as climate change and cybersecurity in future FSRs.
Expected outcomes and benefits
- Improved quality, transparency, and forward-looking nature of financial stability assessments in Curaçao and Sint Maarten.
- Strengthened macroprudential oversight and risk management in the region through:
- Enhanced sectoral credit risk modeling.
- More effective stress testing under macroeconomic scenarios.
- Better data consolidation and potential credit register implementation.
- Clearer communication of regulatory frameworks and indicators across financial sectors.
International Monetary Fund. Curaçao and Sint Maarten: Technical Assistance Report; Financial Stability Report (Technical Assistance Report No. 2025/035).
Content in this bundle
- Executive Summary