IMF Staff Country Reports

Sri Lanka: Financial System Stability Assessment: Update, including Reports on the Observance of Standards and Codes on the following topics: Banking Supervision and Payment Systems

December 17, 2007

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International Monetary Fund. Monetary and Capital Markets Department "Sri Lanka: Financial System Stability Assessment: Update, including Reports on the Observance of Standards and Codes on the following topics: Banking Supervision and Payment Systems", IMF Staff Country Reports 2007, 383 (2007), accessed November 12, 2024, https://doi.org/10.5089/9781451823608.002

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Summary

This paper presents an update to the Financial System Stability Assessment on Sri Lanka. The paper discusses that despite a challenging macroeconomic environment characterized by a high fiscal deficit, inflationary pressures, and a widening current account, near-term risks to the financial system appear manageable. Financial soundness indicators have improved; nonetheless, stress tests suggest that banks remain relatively less resilient to interest rate and liquidity shocks. Moreover, the system faces challenges over the medium term from continued rapid credit growth, rising interest rates, and rigidities in interbank markets.

Subject: Banking, Capital adequacy requirements, Commercial banks, Credit, Credit risk, Financial institutions, Financial regulation and supervision, Insurance, Insurance companies, Money, Pensions

Keywords: Asia and Pacific, Bank, Bank borrowing, Bank exposure, CBSL, Central bank, Commercial banks, CR, Credit, Credit risk, Exchange-earning corporate, Exposure to the government, Insurance, Insurance companies, Interest rate, ISCR, RTGS security objective, Securities

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