WILLEMSTAD – The Central Bank of Curaçao and Sint Maarten (CBCS) is implementing a comprehensive upgrade to its financial stability oversight, with support from the International Monetary Fund (IMF). This reform effort focuses on modernizing the Financial Stability Report, making it more accessible, focused, and forward-looking. The IMF confirmed its involvement after providing technical assistance to the central bank, aligning with earlier conclusions published by Curacao.nu following interviews with economists Servaas Houben and Ronald Ketellapper earlier this year.
The revamped report format marks a significant shift from earlier versions, which were often lengthy and highly technical. The new approach favors concise communication of key messages, thematic organization, and a more analytical tone—especially regarding the identification and explanation of risks to financial stability.
Stronger Focus on Credit Risks
A team from the IMF’s regional technical assistance center CARTAC visited Curaçao and Sint Maarten in October 2023 to support the Central Bank in enhancing its financial stability analysis. The team placed particular emphasis on credit sector risks, highlighting the need for deeper and more structured analytical frameworks.
One of the key outcomes is the development of sector-specific credit risk models, aimed at improving the Central Bank’s ability to forecast how changing economic conditions might affect loan repayment behavior—especially the proportion of non-performing loans.
Stress Testing and Risk Communication
Further improvements include the integration of stress test results into the report. These simulations estimate the impact of hypothetical economic shocks on the financial system. In addition, the IMF recommended clearer communication on the Central Bank’s oversight of banks, insurers, and pension funds, helping the public better understand the risks within those sectors.
The IMF also advised the establishment of a centralized financial stability database and the creation of a credit registry to enable more accurate, individual-level risk assessments.
Enhancing Transparency and Future Readiness
The Central Bank is being encouraged to promote the Financial Stability Report more proactively—through press briefings, interviews, and online publication. This would strengthen transparency and public engagement around financial risk management.
Lastly, the IMF emphasized the importance of addressing emerging risks, such as climate change and cyber threats, in future editions of the report. Doing so would ensure that both Curaçao and Sint Maarten are better prepared for both traditional and evolving threats to their financial systems.
