WILLEMSTAD – Banks in Curaçao and Sint Maarten remain well capitalized, liquid and profitable, but the Centrale Bank van Curaçao en Sint Maarten (CBCS) is strengthening its defenses as global uncertainty and domestic financial vulnerabilities increase.
The Central Bank's latest assessment does not point to an immediate banking crisis. On the contrary, its 2026 Financial Stability Report concludes that the financial sector remained resilient throughout 2025, supported by economic growth, strong capital and liquidity buffers and continued expansion in tourism and real estate.
However, the CBCS is looking beyond the current health of individual banks and increasingly focusing on risks that could affect the financial system as a whole.
That distinction is important.
A bank can be financially healthy while risks are simultaneously accumulating elsewhere in the economy. Rapid credit expansion, rising property prices or increasing concentration of lending in particular sectors can become vulnerabilities if economic conditions suddenly deteriorate.
The CBCS reported earlier this year that financial stability risks have increased amid geopolitical tensions, volatility in international financial markets and cyber threats. Rapid digitalization and growing use of artificial intelligence are also creating additional exposure to cyber risks.
At the same time, tourism and real estate continue to play increasingly important roles in economic activity. That has supported growth but also raises questions about concentration risks should one of those sectors suffer a major downturn.
The scale of the financial system makes those risks particularly important. Banks, pension funds and insurers in Curaçao and Sint Maarten together manage approximately Cg 28 billion to Cg 29 billion in assets, with banks accounting for the largest share.
Stress testing conducted by the CBCS indicates that the financial sector is generally capable of absorbing significant shocks. However, more severe scenarios can expose vulnerabilities involving liquidity, asset quality and other parts of the financial system.
Against that background, the Central Bank is considering introducing a countercyclical capital buffer, or CCyB.
Rather than waiting for a crisis before requiring banks to strengthen their balance sheets, the instrument allows additional capital to be accumulated when financial and economic conditions are favorable. The buffer can subsequently be released during a downturn.
The approach is increasingly common internationally. Current CCyB rates vary considerably: the Netherlands has a 2 percent buffer, while Denmark and Iceland are among jurisdictions with rates of 2.5 percent. Several other European countries maintain lower positive rates, while some continue to keep the buffer at zero.
For Curaçao and Sint Maarten, the precise rate has not yet been determined.
The Central Bank's challenge will be finding the appropriate balance. Requiring additional capital can make banks more resilient, but regulators must also consider the possible effect of capital requirements on lending conditions.
The objective is therefore not simply to make banks hold more money. It is to ensure that sufficient financial capacity is accumulated during relatively good times so it can be used when Curaçao and Sint Maarten face their next major economic shock.