Upgrading Banking Supervision in Kyrgyz Republic


A 2013 IMF financial sector assessment found weaknesses in the Kyrgyz Republic’s banking supervision. The banking system’s legal framework needed to be enhanced, a risk-based supervisory process needed to be implemented, and supervisory staff needed the right training. In addition, although some supervisory tools, such as manuals and memoranda of understanding with foreign supervisors, had been developed earlier, they weren’t applied consistently.


The National Bank of the Kyrgyz Republic developed an action plan to address its challenges and implement the assessment’s recommendations. In January 2016, an IMF expert began a resident assignment in Bishkek to help the authorities upgrade bank regulation and supervision, with a particular focus on risk-based and consolidated supervision.

The National Bank has been working with the expert to develop and execute a high-level strategic plan for risk-based and consolidated supervision. A revised regulatory framework will align with international standards that support risk-based and consolidated supervision, and prudential guidelines and the operational framework are being strengthened. Strengthening skills has been just as important — personnel in banking supervision policies and risk-based supervisory practices are being trained to understand the policy and operational upgrades.


This project is still underway and is expected to lead to the full implementation of an updated risk-based supervisory methodology and an upgrade of the National Bank’s resolutions, guidelines and regulations as recommended by the 2013 assessment. This will include more efficient resource allocation of limited resources in order to improve the overall effectiveness of banking supervision, and a more stable banking system. Improved human resource management, including skills training in a wide range of areas, will help attract and retain competent supervisory personnel. Finally, the National Bank will be able to develop and implement macroprudential policy instruments using international best practices.