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IMF warns against concentration of Peruvian financial sector, dollarization

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IMF warns against concentration of Peruvian financial sector, dollarization

Ahead of a 2018 assessment of financial systems in a number of countries, the International Monetary Fund has warned against a strong concentration within the Peruvian banking system and a high dollarization of the country's economy.

"The assessment [for Peru] will consider measures to further reduce the risks from dollarization, to increase competition in financial services, and to strengthen underdeveloped money markets and capital markets. Other key areas will be the institutional mandates and accountability lines for financial oversight, macroprudential policy, and crisis management and resolution," the IMF said in a blog post on its website.

During 2018, the Washington D.C.-based organization will assess the financial systems of Belgium, Brazil, Poland, Armenia, Jamaica, Namibia, Peru, Romania and Tanzania, along with the Eurozone, looking to "identify risks and propose policies to strengthen their financial stability."

The IMF also emphasized Brazil's "large" need for fiscal adjustments. "Against this backdrop, the IMF will assess banks' risks and vulnerabilities, including those that stem from the corporate sector, the nexus between governments and the banks that hold their domestic debt, and the connections to the large asset-management industry."

The organization also said it will study what helped Brazilian banks withstand the recession and the role of state banks.