Strengthening the Banking Sector, Supervision and Regulation

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The prevailing circumstances and recent developments in theDominican banking system have drawn the attention of the authoritiesand the overall market to the serious shortcomings in bankingregulations and supervision, the risk of poor accounting practices, andthe importance of having banks that are sound participate in themarket. In recognition of the importance of these issues for thecountry and the economy, the authorities are preparing a program torestore confidence and to strengthen the financial system. Thisprogram dovetails with efforts that include the negotiation of aprogram with the IMF, a policy-based lending (PBL) sector programin preparation with the IDB, and a technical-assistance program withthe World Bank. It is important to note that the authorities have beenin close dialogue with the three multilateral organizations, which havekept an ongoing presence in the country since the problems in thebanking sector began to appear.