The Dominican monetary authorities ruled out that the bankruptcy of Silicon Valley Bank and Signature Bank could affect the Dominican financial system, since it does not present direct interaction with these international entities.
The Monetary Board, meeting in extraordinary session to analyze the situation in the United States, highlighted the strength of the Dominican financial system, reflected in sufficient liquidity and capital provisions to absorb unexpected shocks and maintain the orderly operation of the financial and payments market.
It was determined that the international reserves of the Central Bank, which to date amount to US$15,696.8 million, are not exposed to the affected entities and are invested in first-line financial institutions with high credit quality.
Below is the statement from the Monetary Board:
Monetary Board meets to assess the situation in international financial markets
The Monetary Board met in an extraordinary session, dated March 14, 2023, to address the financial situation in international markets, as a result of the bankruptcy and closure of operations of the entities Silicon Valley Bank and Signature Bank, in the United States United of America.
The causes that led to the closure of these entities, the measures adopted by the US government authorities and the evolution of the main stock market indices in advanced economies were analyzed.
In the session, based on the analysis of the interconnections of local banking entities, it was possible to establish precisely that the bankruptcy of Silicon Valley Bank and Signature Bank does not affect the Dominican financial system, since it does not present direct interaction with said international entities.
In addition, the strength of the Dominican financial system was highlighted, reflected in sufficient liquidity and capital provisions to absorb unexpected shocks and maintain the orderly operation of the financial and payments market. In this vein, it was pointed out that, as of March 2023, the delinquency ratio of multiple banks remains at 1.0% with reserves that exceed four times non-performing loans, while regulatory solvency amounts to 15.3% as of December 2022, higher than the 10% required by the Monetary and Financial Law.
Likewise, it was determined that the international reserves of the Central Bank, which to date amount to US$15,696.8 million, are not exposed to the affected entities and are invested in first line financial institutions and high credit quality. In that same order, it was pointed out that international investors continue to value the Dominican economy very positively, as a result of the strength of its fundamentals and the stability of the Dominican peso, which to date reflects an accumulated appreciation of 2.6 percent.
Regarding the recent evolution of the international financial markets, it was found that after the announcement by the government authorities of the United States of America to cover all the deposits of Silicon Valley Bank and Signature Bank, the stock market indices of the main markets have normalized, with upward corrections.
The Monetary and Financial Administration reaffirms its commitment to the stability of the financial system and will maintain the usual monitoring of international financial markets and the global balance of risks.