Turks and Caicos Islands: Financial Stability Report Review, Credit Risk Modelling, and Stress Testing

The technical assistance (TA) missions to the Turks and Caicos Islands (TCI) aimed to enhance the Financial Services Commission’s (TCIFSC) financial stability efforts.
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Volume/Issue: Volume 2025 Issue 011
Publication date:
ISBN: 9798229007474
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Banks and Banking , Finance , financial stability , financial stability report , systemic risk , stress testing , credit risk modeling , Bayesian models , Commercial banks , Financial sector stability , Stress testing , Financial sector risk , Nonperforming loans , Credit risk

Summary

The technical assistance (TA) missions to the Turks and Caicos Islands (TCI) aimed to enhance the Financial Services Commission’s (TCIFSC) financial stability efforts. The missions reviewed the Financial Stability Report (FSR), developed sectoral credit risk models, and established a stress testing (ST) framework. They provided tools for assessing non-performing loans (NPLs) and conducting STs under various macroeconomic scenarios. Results indicate that TCI’s banking sector is resilient, benefiting from robust initial capital. Recommendations include refining the FSR’s structure, improving credit risk modeling, and establishing regular ST exercises. These TA missions reinforce TCIFSC’s capacity to identify and address financial vulnerabilities effectively.