Assessment of Banking Supervision Framework in Aruba

Summary

Aruba’s legal framework for banking supervision meets several key principles as outlined by the Basel Core Principles (BCP). However, there are areas where the framework could be improved to provide better protection for supervisors.

Key Aspects Meeting BCP Principles

The following key aspects of Aruba’s legal framework meet the BCP principles:

• Principle 1(3): A suitable legal framework for banking supervision is necessary, including provisions relating to authorization of banking establishments and their ongoing supervision.
• Principle 1(4): A suitable legal framework for banking supervision is also necessary, including powers to address compliance with laws, as well as safety and soundness concerns.
• Principle 1(5): A suitable legal framework for banking supervision is also necessary, including legal protection for supervisors.

Areas for Improvement

While Aruba’s legal framework meets most of the key principles outlined by the BCP, there are areas that could be improved:

• There is no explicit provision providing protection (civil or criminal) for the supervisory agency or its staff against lawsuits.
• There is no mention of protecting the supervisor and their staff against costs associated with defending actions taken while discharging duties in good faith.

Conclusion

Aruba’s legal framework for banking supervision meets most of the key principles outlined by the Basel Core Principles. However, to provide better protection for supervisors, there are areas that could be improved. By addressing these gaps, Aruba can further strengthen its banking supervision framework and ensure a safer and more stable financial system.