Financial Stability Report

Oman Professes to be on the Learning Curve of Global Financial Regulatory Reforms Agenda –Apex Body Formed to Manage Systemic Risk

The Central Bank of Oman (CBO) derives legal strength from the Banking Law 2000 which sets its objective “to ensure maintenance of financial stability”. An elaborate microprudential regulatory and supervisory framework is in operation. The progressive migration to an improved supervisory regime, Risk Based Supervision (RBS) in the on-site examination framework stands completed. The process of adherence to international revised capital and liquidity norms has been initiated with right earnest.

Macroprudential regulatory stance to promote financial stability and macro-financial surveillance has become the current focus. Use of several macroprudential instruments has been the practice. Regular monitoring and analysis of systemic risks have been introduced to take a macro-view on the financial-economic system and is meant to supplement to the extant micro-assessment undertaken by the regulation/supervision/monetary policy making functions. Work on a suitable Crisis Management Mechanism (CMM) which would include an Early Warning System and a Crisis Resolution Framework are on. Policy formulation is at an advanced stage towards getting banks (especially local D-SIBs) to adopt similar strategies including Bottoms-Up Stress Testing. A dedicated Higher Committee on Financial Stability
(HCFC) to act as the apex body to monitor and manage systemic risk in the economy has been formed which is chaired by the Executive President of CBO with Executive President of Capital Markets Authority (CMA) and senior representatives from the Ministries of Finance and Commerce & Industries as its members.

Credit reporting system, explicit deposit guarantee scheme and emergency liquidity adjustment framework – the sine qua non of an efficient systemic risk management edifice are in operation.

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