Myanmar’s Banking Regulatory Bodies Eye International Practices in Risk-Based Approach to Supervision

June 8, 2020

The Central Bank of Myanmar (CBM) has been working with the International Monetary Fund’s Monetary and Capital Markets Department to develop a more risk-based approach to banking supervision. This effort aims to support the CBM in introducing international best practices in bank regulation and supervision.

Objectives

• Develop bank regulation and supervision based on international best practices
• Introduce a more risk-based approach to supervision

The Guide to Risk-Based Supervision outlines approaches to risk assessment and mitigation based on international best practices. Key risks identified in the Myanmar context include:

Identified Risks

• Legal, regulatory, and reputational risk
• Strategic risk and group-related parties’ risk
• Credit risk, market risk, operational risk, and liquidity risk

The CBM is implementing this new approach over a period until 2020. While perfecting a complete risk-based approach will take years, the CBM remains committed to implementation and has already begun conducting risk assessments using the new risk matrix tool as examinations come due.

Expected Outcomes

• Strengthen the banking sector in Myanmar
• Improve financial stability
• Enhance the country’s economic outlook

The adoption of international best practices is seen as a positive step towards enhancing the country’s economic outlook. The CBM’s efforts to implement a more risk-based approach to supervision are expected to have a significant impact on the banking sector and the overall economy.