The Monetary Board concluded in an extraordinary session held yesterday that the Dominican financial system has no direct interaction with failed banks in United States.
In the meeting, aimed at discussing the situation presented by the international markets after the bankruptcy and closure of operations to the banks Silicon Valley Bank and Signature BankIn the United States of America, the strength of the country’s financial system was highlighted.
The authorities analyzed the causes that led to the closure of these entities, the measures adopted by the US government authorities and the evolution of the main stock market indices in advanced economies.
They explain the strengths
In a press release from the Central Bank (BCRD) it is explained that at yesterday’s meeting the authorities highlighted the strength of the Dominican financial systemreflected in sufficient liquidity and capital provisions to absorb unexpected shocks and maintain the orderly functioning of the financial and payment markets.
It was pointed out that, as of March 2023, the multiple banks delinquency rate remains at 1.0% with reserves that exceed non-performing loans by four times, while regulatory solvency amounts to 15.3% as of December 2022, higher than the 10% required by the Monetary and Financial Law.
Also, it was determined that the International Reserves of the Central Bank, which to date amount to US$15,696.8 millionare not exposed to the affected entities and are invested in first class financial institutions and high credit quality.
In the same order, it was pointed out that the international investors continue to value the Dominican economy very positivelyproduct of the strength of its fundamentals and the stability of the Dominican peso, which to date reflects an accumulated appreciation of 2.6%.
Regarding the recent evolution of the international financial markets, it was verified that after the announcement of the government authorities of the United States of America, in order to cover all the deposits of Silicon Valley Bank and Signature Bank, the stock market indices of the main markets have normalized, with upward corrections.
According to international press reports, the Silicon Valley Bank was the bank of choice for venture capitalists looking for financial partners. for less conventional business proposals than other larger and more established banking institutions.
The BCRD indicates in the statement that the monetary and financial administration reaffirms its commitment to the stability of the financial system and will maintain the usual monitoring of international financial markets and the global balance of risks.
The recent evolution of the international financial markets, after the announcement of the authorities of the government of the United States of America, to cover all the deposits of Silicon Valley Bank and Signature Bank, the stock market indices of the main markets have normalized, with upward corrections, he says.