FINANCIAL STABILITY

Financial stability means the smooth functioning of financial intermediation under both normal and unexpectedly adverse circumstances. The Nouvelle-Calédonie financial system consists of financial intermediaries including banks and non-bank financial institutions and one of the principal objectives of the Autorité Calédonienne des Services Financiers has been to maintain the stability of the financial system. During these years ACSF’s role has been to ensure the overall system is safe and secure and that potential threats or risks to the overall system are detected and reduced.

Financial Regulations

Countries operating in a market based economy regulate their financial sector on the basis of a regulatory framework for financial institutions which includes legal rules and a system of agreed prudential standards. Furthermore, the banking supervisory authorities of such countries expect the financial institutions to self-regulate themselves to a large extent. A key role of banking supervision is to monitor the application of the agreed prudential standards to limit risk. These standards should be reviewed periodically to allow for changing circumstances.

Although a great number of countries have adopted such a framework, to be effective, the framework must reflect the legal, commercial and cultural traditions of the nation – there is no one “best practice” supervisory framework that can be applied to all countries.

A supervisory and examination system is a key component of a financial institution regulatory framework. It ensures that financial institutions comply with the regulatory framework. It assesses whether financial institutions are able to meet their obligations as they fall due. It also gathers information to assist ACSF in further developing and improving its regulatory framework.

The Regulatory Framework in the Nouvelle-Calédonie

The framework for regulating the financial sector in Nouvelle-Calédonie consists of legislation (largely the ACSF Act and FIA) and the facility under FIA for a system of agreed prudential standards.

Prudential Supervision Policies

The following are the Prudential Guidelines issued by the Autorité Calédonienne des Services Financiers in September 2009.

Financial Stability Report

The Financial Stability Report presents ACSF’s assessment of the resilience of the Nouvelle-Calédonie financial system, its view on main risks to financial stability, the actions that is taking to remove or minimize such rules and its outlook for Nouvelle-Calédonie financial stability.