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Kazakhstan’s Financial Regulatory Bodies Face Challenges Amid International Standards

Astana, Kazakhstan - February 29, 2024

The Agency for the Regulation and Development of the Financial Market (ARDFM) has been responsible for supervising Kazakhstan’s financial sector since 2019. However, despite efforts to improve its approach, ARDFM’s independence is not explicitly outlined in the country’s legislation.

Challenges Persist

Despite introducing a risk-based approach and Supervisory Examination and Review Process, concerns persist regarding banks’ asset quality and related party transactions. While progress has been made in addressing these issues, ARDFM’s current approach still falls short of international standards for consolidated supervision.

  • Concerns about asset quality and related party transactions
  • ARDFM’s approach does not meet international standards for consolidated supervision

Addressing the Shortfall

To address this shortfall, ARDFM plans to align key prudential standards with the Basel framework and extend risk management expectations across a banking group, rather than just at the solo level. This move is crucial to ensure the stability of Kazakhstan’s financial sector and its ability to withstand future shocks.

  • Aligning prudential standards with the Basel framework
  • Extending risk management expectations across a banking group

International Expertise

The agency’s efforts are closely watched by international organizations and experts, who are keen to see Kazakhstan adopt best practices in financial regulation and supervision. As the country continues to develop its financial sector, it is essential that ARDFM remains committed to strengthening its supervisory powers and ensuring the integrity of the financial system.

  • International organizations and experts monitoring ARDFM’s progress
  • Importance of adopting best practices in financial regulation and supervision

Maintaining Focus

With banks’ asset quality and related party transactions still a source of concern, it is crucial that ARDFM maintains its focus on these issues and works to address them effectively. Only through strong regulatory oversight can Kazakhstan’s financial sector achieve stability and prosperity.

  • Maintaining focus on addressing concerns about asset quality and related party transactions
  • Importance of strong regulatory oversight for a stable and prosperous financial sector