The frequent recurrences of financial crises – in individual countries and more globally – seem to have been an intractable feature of the modern globalized economy, at least for the last 50 years. This course focuses on the types of collective activities undertaken by nonfinancial firms and households, with the participation of financial institutions, that often lead to financial crises, and how these collective activities might possibly be identified and restrained at an early stage. It provides a review of recent crises, an analysis of financial stability mandates and governance structures that may equip jurisdictions to enact preventive and/or reactive measures such as macroprudential policies (MPP) to bolster the resilience of financial institutions (especially large, systemic institutions), stem contagion, tame the financial cycle, and respond to developing crises in a responsible and responsive manner. The course ends with a crisis management simulation that will give participants the chance to make decisions that may either end a hypothetical crisis or further exacerbate it.
By the end of the course, participants should understand the various threats to financial stability that exist in financial sectors of emerging and advanced economies; be able to link proposed policy measures to these specific threats; be able to spot flaws and recommend improvements in financial stability mandates and governance structures; be able to explain the relative effectiveness of monetary policy and MPP in addressing threats; know how to distinguish between macro-prudential and micro-prudential supervision and explain how they might overlap; and be conversant in the full range of tools that central banks, banking supervisory agencies, deposit insurance funds, and finance ministries have at their disposal to manage and resolve financial crises.
This course is intended for participants who are engaged in macroprudential surveillance or financial stability oversight in central banks and monetary authorities. Participants should have 3-5 years of experience in banking or broader financial sector supervisory activities, such as on-site examination, off-site monitoring, or regulatory policy development. They should also have a basic understanding of the preeminent role of capital and liquidity in minimizing the risk of individual and collective failure of financial institutions. By invitation of SEACEN members, officials of stand-alone financial sector regulatory authorities and deposit insurance funds are also encouraged to attend.
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