On 10 January 2025, the Cayman Islands Monetary Authority (CIMA) published a circular reaffirming its dedication to enhancing the stability and resilience of the Cayman Islands' financial sector. In today's interconnected financial world, establishing a robust crisis management framework is essential for regulated entities, especially those of systemic importance.
Why crisis management matters
A comprehensive crisis management framework empowers financial institutions to navigate periods of financial distress without destabilising the broader system. Its key goals include:
- Protecting critical services: Ensuring continuity of vital financial functions that underpin economic stability.
- Mitigating systemic risks: Reducing the likelihood of widespread financial disruptions.
- Enhancing stakeholder confidence: Building trust among depositors, investors, and international partners.
- Facilitating orderly resolutions: Allowing troubled institutions to resolve issues without resorting to taxpayer-funded bailouts.
CIMA's commitment to implementation
CIMA is fully committed to implementing a comprehensive crisis management framework across the financial industry, focussing on the following initiatives:
- Stakeholder engagement: Active collaboration with industry stakeholders to ensure practical, tailored solutions for the Cayman Islands.
- Regulatory guidance: Issuing clear rules and guidelines for recovery and resolution planning, including requirements for regular plan updates and stress testing.
- Global alignment: Coordinating with domestic and international regulatory bodies to adhere to best practices and address cross-border challenges.
- Ongoing supervision: Integrating the review of crisis management plans into routine supervisory processes to assess their adequacy and effectiveness.
CIMA will publish a Rule and Statement of Guidance on Recovery and Resolution Planning in 2025 for industry consultation. This step underscores its proactive approach to safeguarding the financial system's resilience and reinforces the Cayman Islands' status as a global financial hub.
CIMA's supervisory circular can be found here.
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