Republic of Uzbekistan: Financial Sector Assessment Program-Financial System Stability Assessment

This paper on the Republic of Uzbekistan discusses the Financial System Stability Assessment report. This inaugural Financial Sector Assessment Program (FSAP) in Uzbekistan took place against the backdrop of a strong and resilient economy undergoing wide-ranging reforms. The main objectives of the authorities’ strategy for developing the banking sector are to significantly increase the role of private banks and improve the operations of the remaining state-owned commercial banks. The FSAP noted the solid progress achieved by the authorities in recent years in strengthening institutional and operational frameworks for sustaining financial stability. The authorities should continue efforts to reduce the role of the state in the financial sector and phase out directed and preferential lending. Systemic risk analysis and macroprudential policymaking should be improved with regards to institutional arrangements, policy instruments, stress testing, and public communication. The ongoing reforms of the financial safety net and crisis preparedness framework should be completed, including by broadening the resolution powers of the Central Bank of Uzbekistan and setting up robust arrangements for emergency liquidity assistance.