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Jamaican financial system unaffected by recent int’l bank failures Loop Jamaica

Jamaican financial institutions have not been exposed to the recently failed banks in the US, the island’s central bank has said.

The Bank of Jamaica (BOJ) shared a statement issued by its Financial Policy Committee (FPC) on Thursday, assuring the public and stakeholders in the Jamaican financial sector that the recent international bank failures will not significantly impact the domestic financial system.

According to the FPC, the banking problems in the US and Europe were caused by concentrated exposures to specific industries and inadequate safeguards against interest rate and concentration risks.

The FPC noted that despite being subjected to similar fair value shocks as the US institutions in 2022, the Jamaican financial system has not reflected any significant deterioration in its balance sheet position.

It has remained well-capitalized and capable of meeting liquidity needs, it said.

Furthermore, the FPC stated that the risk of contagion from the events in the US and Europe is low, and supervisors of the domestic financial system will continue to monitor the system to ensure it remains sound.

The central bank’s statement comes after a series of troubling bank developments this month.

As reported by the Associated Press, Silicon Valley Bank, based in Santa Clara, California, failed on March 10 after depositors rushed to withdraw money amid anxiety over the bank’s health.

It was the second-largest bank collapse in US history. Regulators convened over the following weekend and announced that New York-based Signature Bank also had failed. They said that all depositors at both banks, including those holding uninsured funds, those exceeding $250,000, would be protected by federal deposit insurance.

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A third bank, San Francisco-based First Republic Bank, was fortified by $30 billion in funds raised by 11 of the biggest US banks in an attempt to prevent it from collapsing.

Meanwhile, in Europe, Switzerland’s government was forced to orchestrate a takeover of troubled Credit Suisse by rival bank UBS to end financial turmoil.

In a statement, the Swiss National Bank said it is providing large amounts of support for the deal to merge Switzerland’s biggest.

“An insolvency of Credit Suisse would have had severe consequences for national and international financial stability and for the Swiss economy,” said Thomas Jordan, chairman of the Swiss central bank’s governing board. “Taking this risk would have been irresponsible.”