The Central Bank of Oman (CBO) has formulated a preliminary roadmap aimed at fostering sustainable and green financing within the domestic financial system, a recent report revealed.
The CBO’s Financial Stability Report (FSR) 2023 published recently said, “CBO is also actively encouraging financial institutions to develop policies that facilitate and promote green financing.”
“Moreover, CBO is working on improving its analytical capabilities to better manage and deal with climate-related risks,” the report added.
Climate change poses micro prudential and macroprudential risks for the financial system in the form of direct physical shocks and risk from transition to a low-carbon economy, the CBO report said.
“The transition risks and shocks emanating from climate change and the shift towards net-zero emissions are among the key emerging risks for financial stability.”
As part of national climate risk mitigation efforts, the CBO has taken an active role in fulfilling its responsibilities. “It has advised banks and financial leasing companies to enhance their risk management policies and practices in accordance with the international best practices on climate-related financial risks,” the report added.
Moreover, the financial institutions have been encouraged to develop policies that facilitate and promote green financing.
The CBO in its latest FSR said that embracing new technology is indispensable for the financial sector.
With the increasing use of technology, the frequency of cyberattacks is also on the rise. After a surge in 2020, the number of cyber-attacks declined in 2021, but in 2022 they reached a new peak, with reported cyber incidents showing a significant 46 percent increase. The financial sector is a prime target for cybercriminals due to the potential for large gains.
In 2022, globally the reported cyberattacks on financial institutions doubled compared to 2021. This marked the highest cyberattacks in recent years.
This renewed surge, especially targeting financial institutions, could negatively impact customer trust in digital financial services and the financial sector as a whole.
The CBO elaborated further that Oman has also not experienced any significant disruptions from cyber risks in recent times.
However, like any other jurisdiction, the Omani financial sector is vulnerable to such risks.
“Therefore, cybersecurity remains a top strategic priority for CBO. Despite the increased demands on payment and settlement systems (PSS) since the pandemic, Oman’s PSS infrastructure has remained resilient and robust.”
The CBO is actively monitoring developments in various emerging areas and has established task forces dedicated to studying Central Bank Digital Currencies (CBDCs) and other digital innovations.
This proactive approach allows the CBO to equip itself with the expertise required to navigate the evolving landscape of digital finance and stay prepared to take appropriate action when necessary.
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