CBCS uses innovative tools for early risk detection.

Willemstad/Philipsburg:---  The Centrale Bank van Curaçao en Sint Maarten (CBCS) has been upgrading its risk monitoring systems and technical capacities to stay up to date with global developments. By ensuring a robust risk monitoring mechanism, the CBCS can detect risks faced by our financial system as early as possible.

The CBCS' early warning monitoring system (EWMS) is the main tool used to examine systemic Financial Stability risks. Identifying risks in an early stage enables the CBCS to resort to timely policy action. In addition to the conventional early warning indicators, various forecasting techniques provide the CBCS with insights into how the balance sheets of financial institutions can change in the event of an unfavorable shock. Moreover, the CBCS is developing a tool to advance housing market research. In this regard, the CBCS uses data analytics to collect supply-side data on housing pricing. The insights help to monitor hazards connected with housing market developments and associated risks.
To continue building up the CBCS' capacity to improve risk monitoring, the CBCS, in collaboration with the Caribbean Regional Technical Assistance Center, created a credit risk assessment tool in 2023. By predicting credit risk, the CBCS can model the impact of macroeconomic shocks on bank asset quality. This allows the CBCS to implement relevant policy actions on time. In the past year, the CBCS, together with national AML/CFT supervisory agencies, also embarked on a technical assistance trajectory with the IMF to develop a cross-border financial transactions monitoring tool. With the help of this tool, AML/CFT supervisors can better assess cross-border transactions and monitor money laundering and illicit use of the financial system.
More information on our EWMS can be found in the 2024 Financial Stability Report (FSR). This report presents an analysis of the risks and vulnerabilities affecting the monetary union's financial sector during the previous year. The report presents an informed outlook for each financial sector, while the CBCS' macroprudential framework is highlighted. Findings in this FSR have been finetuned with input from stakeholders in the financial sector of Curaçao and Sint Maarten.
The 2024 Financial Stability Report is available on the CBCS website at: https://www.centralbank.cw/publications/financial-stability-reports/2024.
Willemstad, May 15, 2024
CENTRALE BANK VAN CURAÇAO EN SINT MAARTEN