The main findings of the FSAP update are:
* Financial sector regulation and supervision are of a high standard, and processes and resourcing have been significantly enhanced since a 2003 assessment under the Offshore Financial Center (OFC) program. The Jersey Financial Services Commission (JFSC) operates with considerable independence as well as accountability, and has broadly adequate resources.
* The financial crisis has highlighted the vulnerability of Jersey’s banks to events in major financial centers. While Jersey supervisors cannot feasibly analyze in depth the soundness of the financial groups to which their Jersey operations provide extensive funding, it should be able to detect and react to intensified risks stemming from parent institutions.
* Jersey has experienced some effects from the global crisis, but financial soundness indicators (FSIs) for institutions licensed on the island have been satisfactory, and stress tests confirm that the system is resilient to a range of shocks. However, there is high concentration risk and spill-over risk from parent banks.
* The authorities are making contingency plans, a key element of which will be cooperation with home supervisors. Experience elsewhere suggests the usefulness of a dedicated bank insolvency regime.
* Possible introduction of a bank depositor compensation scheme would require careful study. In any case, all depositors must receive clear information on who is responsible for safeguarding their claims and the scheme’s coverage, if any.