Andina

Peru's financial system resistant to liquidity shocks

15:36 | Lima, Nov. 7.

Peru's financial system is resistant to liquidity shocks, the Superintendence of Banking, Insurance, and Private Pension Fund Administration (SBS) Market Risk Intendant Esther Sanchez affirmed on Thursday.

"The financial system is resistant to severe and hypothetical liquidity shocks, and the system's resistance is due to an adequate distribution of assets and liabilities, funding diversification at institutions, and the high-quality liquid asset cushion," she explained.

Her remarks were made during the presentation of the Financial System Stability Report for the month of November 2019.

Sanchez said that this high-quality liquid asset cushion has taken shape at Peruvian financial institutions to meet the liquidity coverage ratio —a standard introduced by Basel III— that SBS has required since 2014.

Basel III includes a series of measures to reinforce regulation, supervision, and risk management at banks that the Basel Committee on Banking Supervision developed in response to the financial crisis that occurred between 2007 and 2009.

On the other hand, Sanchez remarked that financial companies have the opportunity to get other funding options through their contingency plans.

"Moreover, the Central Reserve Bank has tools to provide liquidity to the system, in case of a systemic crisis such as reduced reserves in foreign currency, and to activate credit portfolio report operations," she pointed out.

(END) MDV/RMB/MVB

Published: 11/7/2019