Introduction

The recent financial crisis has underscored the necessity to move beyond a purely micro technique to financial regulation and supervision to a macro approach. Macroprudential analysis assesses the collective behaviour of financial institutions and the way in which it may pose risks to the overall system. This contrasts with microprudential analysis which looks at institutions in isolation and produces assessments at the individual firm level. There is a growing consensus among policymakers that a macroprudential approach to regulation and supervision should be adopted to enable monetary authorities have a direct influence on the supply of credit. These macroprudential tools are needed because credit/asset price cycles can be key drivers of macroeconomic volatility and potential financial instability.

Macroprudential analysis underpinned by microprudential helps to guide monetary policy which involves measures designed to regulate and control the volume, cost, and availability of money and credit in an economy to achieve some specified macroeconomic goals. The major objective of monetary policy is to maintain relative stability in domestic prices. Since the policy interest rate is used to achieve the objective of price stability, macroprudential policy is required to achieve the additional objective of financial stability. However, effective macroprudential policy instruments are an important missing ingredient from the current policymaking toolkit.

Objectives

The main objective of the course is to upgrade the knowledge and skills of participants to effectively analyze microprudential and macroprudential policies for price and financial stability. Specifically, the course is aimed at enhancing participants’ competence in:

• Formulating appropriate supervisory & regulatory policies and taking timely actions to promote safe, smooth, and sound operations of the financial system.
• Analyzing the different microprudential and macroprudential policy options that would limit the risk of contagion with the resultant possible systemic crises.

Broad Themes
The following broad themes, among others, will be covered at the course:

• • Banking System:
  Banking behaviour and vulnerabilities (crises)
• Financial soundness indicators (FSI);
  • Analytical Methods:
  Stress testing financial systems
• Value-at-risk techniques
• Sectorial balance sheet analysis;
  • Qualitative Aspects:
  Incentives      Observance of standards and codes;

• Macroprudential indicators of the health and stability of financial systems;
• Microprudential versus macroprudential approaches to financial regulation and supervision;

Benefits to Participants/Countries Participants would benefit in a number of ways including:

• Enhanced capacity for microprudential and macroprudential policy analysis;
• Equipping the course participants with the necessary tools to provide a holistic view of the financial system for better-informed decision-making by the regulatory and supervisory authorities.

Who May Attend

Attendance is for senior/middle-level officials in central banks, (research, monetary policy, legal, financial supervision & regulation departments, etc.); core economic and finance ministries; central statistical offices, research-oriented institutions, and otherpublic/private organizations whose staff are involved in monetary, financial and economic management.

Delivery Modalities

Experienced consultants and practitioners drawn from the sub-region and WAIFEM faculty will facilitate at the course. They will also make use of lecture materials, case studies, syndicate sessions, and hands-on exercises.