Hargeisa (SLpost)- The Central Bank of the Republic of Somaliland convened a high-level meeting to accelerate the rollout of its Risk-Based Supervision (RBS) framework and unveil new financial supervisory guidelines, marking a key step in its ongoing efforts to modernize the country’s regulatory system and reinforce the stability and resilience of the financial sector.

Senior executives from financial institutions operating under licenses issued by the Central Bank of Somaliland, members of the Central Bank’s Board of Directors, the Secretariat of the Higher Council of Independent Banks, and chairpersons and chief executive officers of licensed commercial banks attended the meeting.

Opening the meeting, Central Bank Governor Abdinasir Ahmed Hirsi outlined the institution’s strategic vision for modernizing Somaliland’s financial supervision framework. He emphasized that the transition to a Risk-Based Supervision model represents a significant milestone in the Bank’s ongoing reforms, designed to enhance financial stability, promote sound corporate governance, and reinforce public confidence in the country’s banking system.

“The adoption of a risk-based supervisory approach will enable the Central Bank to identify and address potential risks before they develop into systemic challenges,” the Governor said. “This reform reflects our commitment to building a resilient, transparent, and internationally aligned financial sector.”

During the session, officials from the Central Bank’s Financial Institutions Supervision Department presented the new supervisory framework, explaining the principles of Risk-Based Supervision, updated risk management procedures, and newly developed financial supervisory guidelines. Participants were briefed on the responsibilities of licensed financial institutions in implementing the new regulatory standards and ensuring full compliance.

Unlike traditional compliance-based supervision, the Risk-Based Supervision framework focuses regulatory attention on institutions presenting the highest levels of financial and operational risk. The approach enables supervisors to allocate resources more effectively, conduct more targeted oversight, and intervene proactively to safeguard the stability of the financial system.

The meeting also highlighted the importance of strengthening cooperation between the Central Bank and licensed financial institutions throughout the implementation process. Participants discussed mechanisms for improving regulatory compliance, enhancing governance standards, and promoting a culture of prudent risk management across the banking sector.

Key areas discussed during the meeting included:

• Implementation of the Risk-Based Supervision (RBS) framework for financial institutions.
• Introduction of new financial supervisory guidelines and enhanced risk management procedures.
• Strengthening cooperation between the Central Bank and licensed financial institutions.
• Improving the quality and effectiveness of financial sector supervision.
• Enhancing the resilience and stability of Somaliland’s financial system.
• Delivering technical training and capacity-building programs to support implementation of the new supervisory framework.

Financial experts regard Risk-Based Supervision as an internationally recognized regulatory approach adopted by many central banks around the world. Rather than applying identical supervisory measures to every institution, the framework allows regulators to prioritize oversight according to each institution’s risk profile, thereby improving regulatory efficiency while reducing vulnerabilities within the financial sector.

Hamse Abdirahman Khayre, the Central Bank’s Deputy Governor, concluded the meeting by reiterating the bank’s dedication to effectively executing the new supervisory model. He urged authorized financial institutions to fully adopt the revised regulatory standards and to collaborate closely with the Bank throughout the reform process.

“The Central Bank remains committed to continuing reforms that strengthen banking supervision and ensure the development of a safe, transparent, efficient, and internationally compliant financial system,” the Deputy Governor said.

The implementation of Risk-Based Supervision is expected to enhance the resilience of Somaliland’s banking industry, improve governance and regulatory compliance, strengthen depositor confidence, and create a more attractive environment for domestic and foreign investment. The reform also aligns with the Central Bank’s long-term strategy of developing a modern, sustainable, and internationally credible financial sector capable of supporting Somaliland’s economic growth.

SOURCE: Somalilandpost News