Beyond Basel: the importance of implementing international financial reporting and capital adequacy standards

What it is about

The Superintendency of Banks of the Dominican Republic explained at the Second Annual Risk Conference (September 27, 2024) why banks should adopt international prudential and accounting standards beyond what the Basel Committee or the IMF recommend.

The 14-slide presentation starts from the Dominican macroeconomic context and the IMF's assessments, raises the questions of why it matters to adopt best practices and how they affect the financial system and the real economy, and reviews market, cybersecurity and operational risk, countercyclical buffers, the Superintendency's strategic axes and its initiatives.

Objectives

• Explain why adopting international standards is important for banks and for the real economy.
• Present the situation of the Dominican financial system according to the IMF's assessments.
• Make known the strategic axes and initiatives of the Superintendency of Banks.

Key takeaways

1. The IMF highlighted that the Dominican financial system is resilient and well capitalized, and recommended adapting the regulatory and prudential framework to the most recent international standards.
2. The country has two decades of growth with an annual average of 5% and controlled inflation, and is the seventh largest economy in the region according to the presentation.
3. The Superintendency argues that adopting standards is not only because Basel or the IMF recommends it, but because of its concrete effects on system stability.
4. Among the risks reviewed are market risk (the system's investment portfolio), cybersecurity and operational risk, as well as countercyclical buffers.
5. The Superintendency's axes are preserving the stability, solvency and efficiency of the financial system and monitoring the solvency, liquidity, compliance and management of institutions.