The Monetary Board met in extraordinary session today to address the financial situation in international markets, as a result of the bankruptcy and closure of operations of the entities Silicon Valley Bank and Signature Bank, in the United States of America. 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 were analyzed.
In said session, based on the analysis of the interconnections of local banking entities, it was possible to establish precisely that the bankruptcy of Silicon Valley Bank and Signature Bank does not affect the Dominican Financial System, since it does not present direct interaction with said international entities.
In addition, the strength of the Dominican financial system was highlighted., reflected in sufficient liquidity and capital provisions to absorb unexpected shocks and maintain the orderly functioning of the financial and payment markets. In this vein, it was pointed out that, as of March 2023, the delinquency coefficient of multiple banks 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.
Likewise, it was determined that the International Reserves of the Central Bank, which to date amount to US$15,696.8 million, are not exposed to the affected entities and are invested in first line financial institutions and high credit quality. In that same order, it was pointed out that international investors continue to value the Dominican economy very positively, as a result 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, 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.
The Monetary and Financial Administration says that it 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.