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Jamaican Regulators Urge Banks to Strengthen Country Risk Management
KINGSTON, JAMAICA - The Bank of Jamaica (BOJ) has issued a new standard aimed at ensuring that licensed banks in the country have adequate policies and procedures in place for managing country risk.
What is Country Risk?
Country risk refers to the potential losses that may arise from lending or investing in foreign markets. As part of their international operations, Jamaican banks are exposed to country risks, which can be significant if not properly managed.
New Standard Requirements
Under the new standard, licensed banks must:
- Establish clear lines of authority and responsibility for approving cross-border lending and exceptions
- Set procedures for managing country risk exposures, including setting limits on exposure to specific countries
- Develop internal country rating systems to assess the creditworthiness of borrowers
- Maintain adequate provisioning for country and transfer risk
- Regularly report country and transfer risk provisioning levels to the BOJ
Why is Country Risk Management Important?
The Bank of Jamaica has emphasized that country risk management is a critical aspect of banking supervision, and that banks must have robust systems in place to identify, monitor, and control country risk exposures. The regulator will conduct regular reviews of banks’ country risk management practices and provisioning levels to ensure compliance with the new standard.
Implementation
The standard comes into effect immediately, and banks are expected to comply with its requirements by [insert date].
About the Bank of Jamaica
The Bank of Jamaica is the country’s central bank, responsible for maintaining monetary stability, regulating the banking system, and promoting economic growth. The BOJ was established in 1960 and has been a member of the International Monetary Fund since 1963.
By implementing this new standard, Jamaican banks can help to mitigate potential losses and protect depositors’ funds, ensuring that the country’s financial system remains stable and secure.