The In­ter­na­tion­al Mon­e­tary Fund (IMF) yes­ter­day an­nounced that it will as­sess a range of fi­nan­cial sys­tems this year, rang­ing from large ones such as Chi­na and Japan to small ones such as Guyana.

The IMF said the Fi­nan­cial Sec­tor As­sess­ment Pro­gramme is its prin­ci­pal tool for as­sess­ing coun­tries' fi­nan­cial sta­bil­i­ty and iden­ti­fies weak­ness­es in a coun­try's fi­nan­cial sys­tem that could threat­en its sta­bil­i­ty, as well as strengths that make the sys­tem re­silient. The coun­try sta­bil­i­ty as­sess­ments are tai­lored to analyse is­sues of par­tic­u­lar in­ter­est or con­cern in each coun­try.

In 2017, teams of ex­perts will fo­cus on sys­temic risks, the health of banks, and con­ta­gion and spillover risks. For each econ­o­my, the IMF will make pol­i­cy rec­om­men­da­tions about how to:

�2 Strength­en the mon­i­tor­ing of risks to the fi­nan­cial sys­tem as a whole

�2 Im­prove fi­nan­cial over­sight and the macro­pru­den­tial frame­work for fi­nan­cial sys­tem safe­ty, and

�2 Pre­pare for stress­ful fi­nan­cial con­di­tions

High­lights for coun­tries un­der re­view in 2017 in­clude:

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Chi­na

Since the glob­al fi­nan­cial cri­sis, Chi­na's growth has re­lied in­creas­ing­ly on cred­it, es­pe­cial­ly in the cor­po­rate sec­tor, in­clud­ing state-owned en­ter­pris­es, and in re­cent months al­so on mort­gage lend­ing. Ten­sions be­tween sus­tain­ing growth and the need to con­tain in­debt­ed­ness, to­geth­er with cer­tain fi­nan­cial sec­tor in­no­va­tions, have led to in­creased fi­nan­cial sec­tor com­plex­i­ty and the risk of gaps in su­per­vi­sion. The IMF will ex­am­ine these is­sues from a sys­temic point of view.

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In­done­sia

Fi­nan­cial con­glom­er­ates play a dom­i­nant role in the fi­nan­cial sys­tem and the econ­o­my, and ac­count for 70 per cent of the as­sets of fi­nan­cial in­sti­tu­tions. The IMF will look close­ly at the over­sight of fi­nan­cial con­glom­er­ates, and seek to iden­ti­fy ar­eas for im­prove­ment in the new­ly im­ple­ment­ed in­te­grat­ed su­per­vi­so­ry frame­work, and the re­cent­ly adopt­ed law on cri­sis man­age­ment and res­o­lu­tion.

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Japan

Since the 2012 as­sess­ment, the prof­itabil­i­ty of fi­nan­cial in­sti­tu­tions' do­mes­tic op­er­a­tions has weak­ened. This has prompt­ed large banks and in­sur­ers to ex­pand over­seas in a search for high­er yields, and small­er banks to in­crease their ex­po­sure to re­al es­tate and small and medi­um-sized en­ter­pris­es. Against this back­ground, the IMF will as­sess vul­ner­a­bil­i­ties as­so­ci­at­ed with the in­ter­na­tion­al ex­pan­sion of banks and in­sur­ers, as well as longer-term prospects for the fi­nan­cial sec­tor in the con­text of de­mo­graph­ic changes and low growth.

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Lux­em­bourg

Home to a key in­ter­na­tion­al cen­tral se­cu­ri­ties de­pos­i­to­ry, Lux­em­bourg has the world's sec­ond largest in­vest­ment fund in­dus­try, and the prof­itabil­i­ty of its bank­ing in­dus­try is tied to the gen­er­al health of these funds. To ad­dress some of the sys­temic vul­ner­a­bil­i­ties, the IMF will use stress tests and spillover analy­sis to as­sess the abil­i­ty of Lux­em­bourg's fi­nan­cial in­sti­tu­tions to ab­sorb liq­uid­i­ty and/or sol­ven­cy shocks.

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Sau­di Ara­bia

An ex­tend­ed pe­ri­od of low oil prices is af­fect­ing the Sau­di econ­o­my. Al­though the bank-dom­i­nat­ed fi­nan­cial sec­tor has so far been re­silient, this episode is an op­por­tu­ni­ty to com­plete the fi­nan­cial re­form agen­da and make im­prove­ments in the func­tion­ing of the in­ter­bank mar­ket that would al­so help banks di­ver­si­fy their fund­ing sources over the longer term. These are the key is­sues the IMF will ex­plore with of­fi­cials.

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Spain

The as­sess­ment will look at progress and im­prove­ments made since the cri­sis. It will tack­le banks' abil­i­ty to ad­just to low prof­its due to their busi­ness mod­els, and their abil­i­ty to man­age the post-cri­sis re­cov­ery. The IMF will al­so ex­am­ine the emerg­ing needs of the in­sti­tu­tion­al frame­work, and ap­ply en­hanced meth­ods to cap­ture cross-bor­der fi­nan­cial shocks, and ac­count for the link­ages be­tween the econ­o­my and the fi­nan­cial sys­tem as a whole.

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Zam­bia

Against a back­drop of de­clin­ing eco­nom­ic growth due to sharply low­er cop­per prices and an un­sus­tain­able fis­cal deficit, the IMF will fo­cus on how to main­tain fi­nan­cial sta­bil­i­ty, in­clud­ing the ad­e­qua­cy of su­per­vi­so­ry re­sources. It will al­so ex­am­ine the ad­her­ence to in­ter­na­tion­al norms of the le­gal and reg­u­la­to­ry frame­work for fi­nan­cial sec­tor over­sight.

Dur­ing the year, the IMF will as­sess the economies of Bahrain, Bul­gar­ia, Chi­na, Guyana, In­dia, In­done­sia, Japan, Lux­em­bourg, Nether­lands, New Zealand, Sau­di Ara­bia, Spain, Turkey and Zam­bia joint­ly with the World Bank.

In 2016, the IMF con­clud­ed as­sess­ments of the fi­nan­cial sec­tors in Be­larus, Fin­land, Ger­many, Ire­land, Lebanon, Mada­gas­car, Mau­ri­tius, Mex­i­co, Mon­tene­gro, Rus­sia, Swe­den and the Unit­ed King­dom.