Financial Crime World

Financial Institution Risk Management Policies in Oman Take Centre Stage Amid Global Economic Uncertainty

Introduction

The recent upgrade of the Financial Stability Board (FSB) to the existing Financial Stability Forum (FSF) by G-20 leaders at the London Summit on April 2, 2009, underscores the critical importance of financial stability as a global best practice for safeguarding financial systems from potential downturns.

Oman’s Proactive Approach

The Central Bank of Oman (CBO) has been proactive in implementing measures to ensure maintenance of financial stability since the promulgation of the Banking Law 2000. In line with international best practices, CBO formed an independent Financial Stability function in 2011, which issues the Financial Stability Report (FSR). The report provides guidance to regulators, government, and market participants on recognizing vulnerabilities and safeguarding infrastructure, institutions, and various aspects of the Omani financial market.

Key Initiatives

  • Micro and macro prudential regulatory and supervisory framework is currently operational
  • Risk-Based Supervision (RBS) has been completed as part of its on-site examination framework
  • Adherence to international revised capital and liquidity norms is underway
  • Financial Stability Department (FSD) regularly monitors and analyzes systemic risks

Strengthening Regulatory Coordination

A dedicated Joint Financial Stability Committee has been formed to shape Oman’s financial-economic regulatory philosophy, ensuring stability in the country. The committee is chaired by the Executive President of CBO, with the Executive President of the Capital Market Authority as Vice Chair and senior representatives from relevant governmental entities.

Objectives

  • Strengthen financial regulatory coordination
  • Create a surveillance framework that can monitor and report on market trends and financial stability-related issues

Enhancing Financial Stability

Oman has introduced several policies aimed at improving financial inclusion, combating money laundering, and enhancing banking stability. The country is also on track with its implementation schedule of Basel III capital and liquidity standards.

Additional Measures

  • Diversification efforts and non-hydrocarbon GDP growth have provided further support to the financial sector’s robustness against potential negative effects on financial stability
  • Banking stability index indicates that Oman’s banking sector remains well-capitalized, profitable, and fairly liquid with a low infection ratio, signaling its overall stability.

Overall, Oman has taken significant steps to strengthen its financial institution risk management policies, ensuring the stability of its financial system amidst global economic uncertainty.