| Summary: | This Technical Note on Maldives discusses macroprudential policy. The creation of a macroprudential committee with a clear mandate and decision-making powers is recommended. This committee would rely on a well-resourced financial stability unit, acting as a secretariat and providing data-driven recommendations. The Maldives Monetary Authority (MMA) should consider creating a set of early warning indicators and further develop its macroprudential toolkit. A comprehensive dashboard of both broad-based and sectoral indicators would help monitor systemic risks. Indicators of credit, real-estate development, corporate performance, and household indebtedness should be considered for implementation. In addition, the introduction of several key macroprudential instruments would help prevent the emergence of systemic risk. MMA should follow through on its plan to introduce two household-related instruments. The Financial Sector Assessment Program team recommends the development of additional instruments to safeguard bank liquidity and reduce the currency mismatch of banks as well as other instruments recommended by the Basel Committee on Banking Supervision
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