Pacific Finance Sector Briefs: Tonga
Abstract
Description
This brief provides an overview of Tonga’s finance sector, and discusses the key challenges and how they can be addressed.
The National Reserve Bank of Tonga (NRBT) is the country’s central bank and is responsible for the licensing, regulation, and supervision of financial institutions. The country has four licensed commercial banks, two of which are branches of international banks. While the finance sector is currently stable, it lacks diversity and is relatively underdeveloped. Regulatory vigilance is essential due to risks arising from lenient lending standards and a lack of supervision of the small number of nonbank financial institutions. To increase financial stability, the government is aiming to improve the NRBT’s supervision, regulation, and legal framework.