Peer Review of Saudi Arabia
The peer review examined three topics relevant for financial stability and important for Saudi Arabia: the macroprudential policy framework, bank resolution and deposit insurance. The review focused on the steps taken by the authorities to implement reforms in these areas, including with respect to relevant recommendations in the 2011 Financial Sector Assessment Program report by the International Monetary Fund and the World Bank.
The peer review concludes that a fair amount of progress has been made on all three topics. In particular, the Saudi Arabian Monetary Agency (SAMA) has developed and started operationalising a macroprudential policy framework; a draft resolution law has been proposed; and an explicit deposit insurance system will be introduced from 1 January 2016.
However, there is additional work to be done.
On the macroprudential side, SAMA needs to further strengthen institutional arrangements, enhance its analytical capacity for financial stability and publicly communicate macroprudential policy measures.
On bank resolution, the authorities should proceed with the prompt adoption of the draft law and make it operational.
On the deposit insurance system, further work is needed to address depositors’ perception of an implicit deposit guarantee and clarify the implementing rules to ensure that it can function credibly and effectively.