Financial Stability

SBP has implemented a comprehensive Stress Testing framework to assess the vulnerabilities and resilience of regulated financial institutions against severe shocks to key risk factors and macroeconomic conditions, including the impacts of climate-change risks. Under this framework, SBP conducts single-factor sensitivity analysis, multifactor sensitivity analysis and Macro Stress Testing or scenario analysis on quarterly basis. The summary results of Sensitivity Analysis are also shared in Quarterly Compendium every quarter and the aggregated results of macro-stress testing are published in annual Financial Stability Review and Governor Report to the parliament. SBP has also issued ‘Guidelines on Stress Testing’ for its regulated institutions i.e., Banks, DFIs, Islamic banks, Islamic bank branches and Micro Finance Banks, instructing them to conduct single factor sensitivity analysis on quarterly basis. Furthermore, Sample D-SIBs are required to also perform macro-stress testing on annual basis and incorporate these results in their internal capital adequacy assessment and planning process. In Dec-2025, SBP has issued Guidelines on Climate Stress Testing which provide scenarios on climate-related single factor shocks for physical and transition risks for the SBP regulated financial institutions. Moreover, under these guidelines, Sample D-SIBs are now required to incorporate climate-related risks into their annual scenario analysis i.e., Macro Stress Testing exercise.

SBP Stress Testing Guidelines and SBP Climate Stress Testing Guidelines can be accessed at:

Macro-prudential supervision policy for ensuring financial stability involves extensive interaction with different policies including monetary policy, micro-prudential policy, fiscal policy, among others. Moreover, an extensive coordination is required for sharing experiences and views on key systemic risks as well as enabling policies and tools to address these risks. For this purpose, multiple coordination arrangements with internal and external stakeholders have been set up and the same are described as below.

Institutional Arrangements

A senior-level coordination mechanism is available in SBP for monitoring financial stability issues, taking decisions to mitigate identified systemic risks and facilitating coordination among various departments to protect and enhance the resilience of the banking system.

Domestic Coordination

SBP-SECP Joint Task Force (JTF) on Financial Conglomerates

The JTF serves as a focal point for collaboration between the two regulators (SBP and SECP) on matters related to Financial Conglomerates. The primary objective of task force is to identify and tackle risks posed by conglomeration in the financial sector of Pakistan. The two regulators share trigger points to serve as early warning system with respect to overall health of the financial conglomerates, possible regulatory arbitrage including multiple use of capital, questionable intra-group transactions, issues related to implementation of group-level AML/CFT/CPF compliance programs of financial institutions and systemic risks.

National Financial Stability Council (NFSC)

NFSC was established on 2020 through a tripartite MoU between the Ministry of Finance, SBP and SECP. As per this arrangement, the Minister of Finance and Revenue is the chairperson of the Council, while the Governor SBP and Chairman SECP are its members. The objective of NFSC is to promote financial system stability in Pakistan and enhance the inter-agency collaboration to provide coordinated responses to systemic risks, especially those with cross-market and financial stability implications.

International Coordination

SBP plays an active role in contributing towards the implementation of various global financial reforms. For this purpose, it coordinates with various cross border supervisors and international bodies including the IMF, World Bank, BIS, BCBS, AFIFSB, FSB Regional Consultative Group for Asia (RCG Asia) etc. on matters related to financial stability. SBP officials are contributing to international forums through participation in FSB RCG Asia meetings and working groups of BCBS and AFIs and conducting capacity-development sessions for officials of other jurisdictions’ central banks. Moreover, SBP also provides feedback on FSB and IMF surveys aimed at assessing the financial stability of the financial sector.