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| Financial Stability |
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| About Financial Stability: |
Financial stability reflects the state in which the financial system-financial intermediaries, financial markets and financial market infrastructure-aids in smooth flow of funds between savers and investors in a structured and trustful manner. Given the importance of financial stability for the well functioning economy, ensuring stability of the financial system has emerged as one of the key responsibility of the central banks and regulatory authorities across the world.
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| Structure of Financial System: |
Financial sector of Pakistan constitute banks, Development Finance Institutions (DFIs), Microfinance Banks (MFBs), Non-banking Finance Companies (NBFCs), insurance companies, Modarabas and other financial intermediaries.
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| Macro-Prudential Policy Framework: |
In view of the SBP's statutory mandate to ensure stability of the financial system, an elaborate Macroprudential Policy Framework (MPPF) has been instituted that aims to use appropriate prudential tools to proactively limit the key systemic risks to financial stability. The Framework details SBP's role in ensuring the financial stability, including the key aspects such as legal power and obligations, institutional arrangements, macroprudential tools at SBP's disposal and key considerations in the operationalization of these tools, systemic risk assessment practices, and, importantly, the communication of state of financial stability as well as recommendation of potential policy interventions.
(Read the MPPF document here)
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| Financial Stability Assessment: |
A key element of financial stability framework is periodic assessment, systemic risk monitoring and availability of contingency planning & resolution framework.
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