Macro-prudential Policy: Implementing the Financial Stability Mandat
01 - 01 Jan, 1970
To Be Determined;
What are the long-term impacts – and policy lessons – from the Covid-19 pandemic?
How can central banks, as the institution responsible for financial stability incorporate climate change into regular assessments and stress tests?
What are the systemic implications of CBDCs and stablecoins – and what are the priorities from a financial stability viewpoint?
For those charged with managing financial stability within central banks, these are just some of the major questions they are facing when addressing systemic risks in the global financial system. Increasingly, central bankers recognise the need not just to update toolkits but to overhaul frameworks.
By the end of the course, participants will be able to:
- Evaluate their macro-prudential policies in the light of Covid-19
- Create scenario based stress testing for climate-related risks
- Understand how to measure macro-prudential instruments’ effectiveness
- Formulate an outlook for macro-prudential policy in the near-term
- Analyse emerging international standards and future policy initiatives
This course is designed to equip central bankers to meet these challenges.
Course introduction session led by the chair
- Introductions and welcome from the chairperson
- Overview of the training course
- Discussion of the delegate expectations
Macro-prudential policies: policy responses to Covid-19
- Tips for effective coordination and calibration of macro- and micro-prudential policy
- Implications for institutional arrangements and organisation
- Examples of mechanisms for a continuous exchange of information for conflict resolution
- Case study: macro- and micro-prudential supervision in a Covid-19 era
Climate risks as the new source of systemic instability
- Implications of climate change for the stability of financial systems
- Overview of key transition and physical risks
- The role of financial policy and regulation
- Climate scenario analysis for central banks and supervisors
- Stress testing: taxonomy and key concepts
- Stress testing in the euro area, UK, and the US
- Stress testing: the way forward
- Climate change stress tests
Formulation of macro-prudential policies: implementation and governance issues
- Key steps for the effective design of macro-prudential policy
- Ensuring effective use of policy tools and instruments
- Main operational and governance challenges, institutional limitations and how to overcome them
- Discussion: formulation, implementation, and governance of macro-prudential policy in the delegates’ jurisdictions
Basel IV – The Final Countdown
- Basel IV implementation: Overview of global progress and main challenges
- EU Banking Package 2021: Finalisation of the CRR 3 and CRD 6 legislative process
- Progress in other key jurisdictions: Focus on the new US Basel III endgame and UK Basel 3.1 proposals
- Expected impact across regions: Will Basel IV disadvantage EU banks versus their US or global counterparts?
Making the most of big data and advanced analytics in macro-prudential analysis
- Big data
- Big data and central banks
- Opportunities & risks
- Applications to systemic risk
Monetary policy and financial stability: longevity of ‘leaning against the wind'
- Key areas of interactions between financial stability and monetary policy
- Overview of dilemmas associated with ‘leaning against the wind’
- Implications for risk taking, credit and asset prices
- Discussion: how closely should decision on macro-prudential and monetary policy be integrated?
Shadow banking and its role in the recent Covid-19 crisis
- Recent developments in shadow banking: some relevant statistics
- The role of shadow banking institutions during the Covid-19 crisis
- Is there a need to reassess the prudential regulatory approach?
Systemic stress-testing: new tools and frameworks: is Covid-19 prompting a reassessment?
- The evolving role of systemic stress-testing in financial stability assessment
- Building blocks of an effective stress testing framework
- Avenues for post-Corona stress-testing
- Discussion: is Covid-19 prompting a reassessment?
Understanding the dynamics of financial stability: Financial Sector Stability Assessments
- A comprehensive approach to financial stability
- Conceptual underpinnings of Financial Sector Assessment Program (FSAP)
- Case studies
Financial stability and the evolution of global interest rates: the end of the low interest rate era?
- Causes of the secular decline in interest rates
- Stability implications
- Effects on emerging markets
- Recent and prospective interest rate movements
- Possible policy responses
Closing remarks and delegate action plans
Concluding session led by the chair
- Summary of the course
- Discussion of the observed trends and case studies
- Application of learning points in the delegates’ home organisations
- Preparation of action points