- Total assets of financial intermediation entities grew by 7.9% as of December 2025.
The Dominican Republic’s financial system has exhibited balanced and stable growth over the past year, despite the turbulent, complex, and highly uncertain global economic environment. This resilience has been largely supported by the monetary and financial policies implemented by the Central Bank to promote sound risk management within financial intermediation entities, as well as by the robust performance demonstrated by these institutions.
This article provides an overview of the principal measures adopted and the resulting outcomes for the financial system, with the objective of keeping economic stakeholders and the general public informed about current conditions and outlook toward 2026.
Promoting Prudent Risk Management
The Dominican financial system has preserved stable conditions despite global uncertainty and volatility in international financial markets. The most recent available data indicate that total assets of financial intermediation entities grew by 7.9% as of December 2025, reaching DOP 4.15 trillion (equivalent to 52.2% of GDP). The loan portfolio expanded by 9.2%, contributing to the pace of economic activity.
On the liabilities side, public deposits reached DOP 3.19 trillion at year-end 2025, equivalent to 40.1% of GDP, reflecting year-over-year growth of 10.6%. Financial intermediation entities increased their net equity by DOP 53.6 billion (11.5%), totaling DOP 521.4 billion (6.54% of GDP). Based on key balance sheet indicators, return on equity (ROE) stood at 21%, return on assets (ROA) at 2.5%, and the solvency ratio reached 19.9% as of December 2025—well above the 10% regulatory minimum established under the Monetary and Financial Law and above regional averages in Central America and the Caribbean.
This solid performance has been strongly influenced by the Central Bank’s monetary and financial policies, particularly those aimed at limiting foreign exchange and credit risk in an environment of heightened external uncertainty that could impact the exchange market and capital flows. To this end, the Monetary Board adopted measures to regulate foreign currency lending and reduce currency mismatches among economic agents—namely, situations where foreign currency liabilities are serviced with local currency income, potentially affecting repayment capacity and financial stability.
Through its First Resolution dated March 13, 2025, the Monetary Board established new limits on foreign currency lending to non–foreign currency–generating sectors, capping such loans at 25% of public deposits denominated in foreign currency. Additionally, via its Second Resolution dated March 24, 2025, new limits were set on net foreign currency positions (the difference between foreign currency assets and liabilities), with both long and short positions capped at 25% of paid-in capital and legal reserves for financial intermediation entities, exchange agents, and remittance and exchange operators.
In line with convergence toward international best practices in prudential regulation, transparency, and financial reporting, the Monetary Board authorized the implementation of the fair value (mark-to-market) accounting methodology for investment portfolios of financial intermediation entities. Effective January 1, 2026, financial statements will reflect the real-time economic value of investments, strengthening market risk management and enhancing the system’s capacity to proactively anticipate capital needs in periods of heightened global uncertainty. This initiative also enables future updates to regulations governing market risk, liquidity risk, and derivatives operations as part of the gradual adoption of the Basel framework.
Within this same scope, the Monetary Board approved a comprehensive amendment to the Operational Risk Regulation to strengthen risk management practices in accordance with international Basel standards. The reform enhances governance standards, capital requirements, and prudent management of technological and information security risks. Additionally, the Monetary and Financial Administration updated minimum capital requirements and introduced new operational capital requirements for exchange agents and remittance and exchange operators, particularly in light of their inclusion in the Central Bank’s foreign exchange trading platform.
On the Path Toward Financial Stability
Risk assessments and stress tests conducted on financial intermediation entities indicate that, despite global turbulence and uncertainty, the Dominican financial system is expected to maintain stable conditions into 2026. Analyses of credit, exchange rate, interest rate, and liquidity risks reveal no material vulnerabilities or significant financial risks that would compromise operational viability or disrupt the provision of financial services across the economy.
Assets are projected to remain around 52.5% of GDP, while domestic credit to the private sector is expected to grow between 10% and 12%, consistent with productive sector dynamics. Even under severe macro-financial stress scenarios, the financial system would maintain adequate liquidity and solvency levels to ensure continuity in financial services to the real sector. Collectively, these factors reinforce short-term expectations of stronger credit portfolio dynamism, supporting economic activity as financial conditions gradually ease amid declining interest rates.
Contrary to commentary suggesting persistently elevated interest rates and their adverse economic impact, rates have declined significantly:
- The average lending rate decreased from 15.2% in January 2025 to 13.6% in January 2026, a reduction of 160 basis points.
- Lending rates for productive sectors fell from 14.4% to 12.7% over the same period, a decline of 170 basis points.
- Deposit rates declined from 9.6% in January 2025 to 5.9% in January 2026, representing a cumulative reduction of 370 basis points.
- The interbank rate fell from 11.6% to 6.9% over the same period, decreasing by 470 basis points.
Macroeconomic and financial performance prospects for 2026 remain favorable. Central Bank forecasting models estimate economic growth at approximately 4.0%, while inflation is expected to remain within the policy target range of 4.0% ± 1.0%, in compliance with the constitutional mandate to preserve price stability.
Overall, the Dominican financial system is expected to continue expanding in a balanced manner throughout 2026 within a context of monetary and financial stability. Nevertheless, the Central Bank remains vigilant regarding potential risks and shifts in global and domestic financial conditions and stands ready to adopt necessary policy measures to safeguard economic growth and stability in the Dominican Republic.
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