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Bermuda reports progress in enhancing financial regulation |
Date: Thursday, July 16, 2009
Author: Hedgeweek.com
The Bermuda Monetary Authority says it made significant progress toward enhancing the regulatory framework for Bermuda's financial services industry during 2008.
Its 2008 Annual Report says this involved the introduction of key regulatory policy initiatives which have strengthened the standards and the quality of Bermuda's risk-based regulatory framework.
Matthew Elderfield, chief executive of the authority, says: '2008
was a challenging year for all financial regulators. The global
financial crisis meant that during the year we actively managed the
impact of the crisis on Bermuda's financial sector, while at the same
time pursuing a regulatory agenda designed to establish the Authority
as a leading risk-based financial services regulator.'
As the crisis deepened throughout 2008 the authority's objective was to
maintain the stability of Bermuda's financial markets. The authority
actively monitored all sectors within Bermuda financial industry and
worked closely with market participants and international regulators to
manage the impact of the growing crisis on Bermuda's financial
markets.
It reviewed the capital levels of Bermuda's banks, which showed that the all the banks met the authority's capital and liquidity standards, and, as a precautionary measure, led to the authority requiring banks to hold an additional capital buffer to withstand a severe economic downturn.
The authority says it also remained engaged in the international debates on regulatory change which emerged as a result of the crisis. This activity took place primarily through an increased level of participation with international standard setting bodies, such as the International Association of Insurance Supervisors.
The authority maintained focus on its goal of developing a leading international regulatory framework for the insurance sector by completing a number of initiatives in preparation for mutual recognition assessments with other important international markets. This included the introduction of a new risk-based approach for Bermuda largest commercial insurers, including a sophisticated assessment of catastrophe risk; development of an internal models framework for determining regulatory capital levels for insurers; and development of group supervision proposals.
Elderfield says: 'The work completed this year demonstrates that Bermuda is keeping pace with international developments, such as Europe's Solvency II directive. Due to the considerable amount of work accomplished thus far, we are confident that Bermuda's framework ultimately will receive a favourable assessment.'
The authority also worked with the Ministries of Justice and Finance to complete a major enhancement to Bermuda's anti-money laundering and anti-terrorism financing provisions. A suite of legislation was drafted and subsequently enacted that strengthened the jurisdiction's AML/ATF standards in line with the Financial Action Task Force's recommendations.
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