Managing Global Liquidity: Supervising Cross-border Capital Flows & Systemic Risks Training Course

Introduction

The increasing interconnectedness of global financial markets necessitates a sophisticated understanding of cross-border capital flows and their potential to generate significant systemic liquidity risks within capital markets. This crucial training course directly addresses the challenges central banks face in effectively monitoring and managing these complex dynamics. Participants will gain a comprehensive understanding of the drivers and implications of cross-border capital flows, the mechanisms through which they can create systemic liquidity risks, and the supervisory tools and strategies central banks can employ for proactive risk mitigation. Mastering the supervision of cross-border capital flows and systemic liquidity risks is essential for maintaining financial stability in a globalized financial system.

This intensive training course delves into the intricacies of tracking and analyzing cross-border capital flows, including their impact on domestic liquidity conditions and the potential for rapid and destabilizing flow reversals. We will explore the various channels through which cross-border capital flows can amplify systemic liquidity risks, such as through interconnected financial institutions and reliance on global funding markets. Participants will learn about advanced monitoring techniques, early warning indicators, and the application of macroprudential tools specifically designed to manage the systemic liquidity risks associated with volatile cross-border capital flows, empowering central banks to safeguard financial stability.

Target Audience

• Central Bank Supervisors
• Financial Stability Analysts
• Monetary Policy Officials
• Risk Management Professionals
• International Finance Specialists
• Macroprudential Supervisors
• Financial Market Infrastructure Oversight Specialists

Course Objectives

• Understand the key drivers and dynamics of cross-border capital flows and their impact on global and domestic financial markets.
• Identify the various channels through which cross-border capital flows can generate and amplify systemic liquidity risks.
• Learn advanced techniques for monitoring and analyzing cross-border capital flows relevant to systemic risk assessment.
• Understand the specific systemic liquidity risks that can arise from different types of cross-border capital flows (e.g., portfolio flows, bank flows).
• Explore the role of interconnectedness within the financial system in transmitting systemic liquidity risks associated with cross-border flows.
• Learn about early warning indicators and stress testing methodologies for assessing systemic liquidity risks stemming from cross-border capital movements.
• Understand the application of macroprudential tools for managing systemic liquidity risks related to cross-border capital flows.
• Analyze the challenges central banks face in supervising and managing cross-border liquidity risks in a globalized financial system.
• Explore international cooperation mechanisms and information sharing arrangements for monitoring cross-border capital flows and liquidity risks.
• Understand the interplay between cross-border capital flows, exchange rates, and domestic monetary policy.
• Learn about the impact of global financial conditions and external shocks on cross-border capital flows and systemic liquidity.
• Develop strategies for enhancing the resilience of the financial system to volatile cross-border capital flows and associated liquidity risks.
• Understand the supervisory considerations for financial market infrastructures in managing liquidity risks arising from cross-border activities.

Duration

10 Days

Course content

Module 1: Drivers and Dynamics of Cross-Border Capital Flows

• Analyzing the macroeconomic factors (e.g., interest rate differentials, growth prospects) influencing cross-border capital flows for your module.
• Exploring the role of financial globalization and liberalization in facilitating capital mobility.
• Understanding the impact of global risk sentiment and uncertainty on capital flow patterns.
• Identifying different types of cross-border capital flows (e.g., FDI, portfolio investment, bank lending) and their characteristics.
• Examining the role of exchange rates and currency regimes in shaping cross-border capital movements.

Module 2: Channels of Systemic Liquidity Risk Transmission via Cross-Border Flows

• Understanding how cross-border funding dependencies can create systemic liquidity vulnerabilities for your module.
• Analyzing the role of correspondent banking relationships in transmitting liquidity shocks across borders.
• Exploring the impact of cross-border collateral chains and their potential for liquidity contagion.
• Understanding how global banks and financial institutions can propagate liquidity stress internationally.
• Examining the role of offshore financial centers in facilitating cross-border liquidity flows and associated risks.

Module 3: Advanced Monitoring and Analysis of Cross-Border Capital Flows

• Utilizing balance of payments data and international investment position statistics for tracking capital flows for your module.
• Employing high-frequency data and market indicators to monitor real-time capital movements.
• Applying econometric techniques to analyze the drivers and sensitivities of cross-border flows.
• Developing early warning indicators for detecting potential flow reversals and liquidity stress.
• Leveraging data visualization tools to identify trends and patterns in cross-border capital flows.

Module 4: Systemic Liquidity Risks Arising from Specific Capital Flow Types

• Analyzing the systemic liquidity risks associated with volatile portfolio flows and their impact on asset markets for your module.
• Understanding the potential for sudden stops and capital flight to trigger liquidity crises.
• Exploring the liquidity risks arising from cross-border bank lending and deposit flows.
• Examining the role of foreign exchange markets in amplifying liquidity shocks related to capital flows.
• Understanding the specific liquidity challenges posed by cross-border flows in emerging markets.

Module 5: The Role of Interconnectedness in Transmitting Systemic Liquidity Risks

• Applying network analysis to map cross-border financial linkages and identify key nodes of systemic importance for your module.
• Understanding how interconnected financial institutions can transmit liquidity shocks across borders.
• Analyzing the role of central counterparties (CCPs) in managing and potentially concentrating cross-border liquidity risks.
• Exploring the impact of cross-border ownership and control of financial institutions on liquidity transmission.
• Examining the implications of interconnectedness for the design of effective liquidity risk management frameworks.

Module 6: Early Warning Indicators and Stress Testing for Cross-Border Liquidity Risks

• Developing early warning indicators based on capital flow data, market prices, and macroeconomic fundamentals to signal potential liquidity stress for your module.
• Designing and implementing stress testing scenarios that incorporate cross-border capital flow shocks and their impact on systemic liquidity.
• Utilizing reverse stress testing to identify scenarios that could lead to severe cross-border liquidity crises.
• Analyzing the use of macroprudential stress testing frameworks to assess system-wide liquidity resilience to external shocks.
• Understanding the challenges of modeling cross-border liquidity contagion in stress testing exercises.

Module 7: Macroprudential Tools for Managing Systemic Liquidity Risks from Cross-Border Flows

• Exploring the application of reserve requirements and other liquidity buffers to manage risks associated with volatile capital flows for your module.
• Analyzing the use of macroprudential instruments targeting specific sectors or activities vulnerable to cross-border liquidity shocks.
• Understanding the role of capital controls and other flow management measures in mitigating systemic liquidity risks.
• Examining the effectiveness and potential unintended consequences of different macroprudential tools in managing cross-border liquidity.
• Considering the political and economic constraints on the use of certain macroprudential measures.

Module 8: Challenges in Supervising Cross-Border Liquidity Risks

• Addressing the information asymmetries and data gaps in monitoring cross-border liquidity flows and exposures for your module.
• Understanding the difficulties in enforcing domestic liquidity regulations on foreign entities.
• Exploring the challenges of coordinating supervisory actions across multiple jurisdictions.
• Analyzing the potential for regulatory arbitrage in cross-border liquidity management.
• Understanding the impact of different legal and regulatory frameworks on cross-border liquidity supervision.

Module 9: International Cooperation for Monitoring Cross-Border Flows and Liquidity Risks

• Exploring the role of international forums (e.g., FSB, IMF) in promoting cooperation on cross-border capital flow monitoring for your module.
• Understanding bilateral and multilateral information sharing agreements among central banks and regulatory authorities.
• Analyzing the challenges and successes of international efforts to enhance data collection and analysis of cross-border flows.
• Examining the potential for joint supervisory actions to address cross-border liquidity risks.
• Fostering dialogue and collaboration on best practices in managing global liquidity.

Module 10: Interplay of Cross-Border Flows, Exchange Rates, and Monetary Policy

• Understanding how cross-border capital flows can influence exchange rate dynamics and volatility for your module.
• Analyzing the implications of exchange rate movements for systemic liquidity risks.
• Exploring the challenges for monetary policy in managing domestic liquidity in the face of volatile cross-border flows.
• Examining the use of foreign exchange intervention as a tool for managing liquidity and exchange rate pressures.
• Understanding the coordination challenges between monetary policy and macroprudential policy in managing cross-border liquidity.

Module 11: Impact of Global Financial Conditions and External Shocks

• Analyzing how global interest rates, risk premia, and financial market volatility can influence cross-border capital flows for your module.
• Understanding the transmission mechanisms through which external shocks can trigger sudden capital flow reversals and liquidity stress.
• Exploring the vulnerability of emerging markets to global financial conditions and capital flow volatility.
• Examining the role of global safe haven assets in shaping cross-border liquidity flows during crises.
• Developing strategies for assessing and mitigating the impact of external shocks on domestic liquidity.

Module 12: Enhancing Resilience to Volatile Cross-Border Flows and Liquidity Risks

• Strengthening domestic financial institutions' liquidity buffers and risk management practices to enhance resilience for your module.
• Developing robust contingency funding plans to address potential liquidity shortfalls arising from capital flow reversals.
• Enhancing the capacity of central banks to provide liquidity support in times of stress.
• Promoting the development of deep and liquid domestic financial markets to reduce reliance on external funding.
• Fostering sound macroeconomic policies to reduce the likelihood of sudden capital outflows.

Module 13: Supervising Financial Market Infrastructures' Liquidity Risks from Cross-Border Activities

• Understanding the role of FMIs (e.g., payment systems, CCPs) in facilitating cross-border transactions and managing associated liquidity risks for your module.
• Analyzing the specific liquidity risks faced by FMIs arising from cross-border participation and settlement.
• Exploring supervisory expectations for FMI liquidity risk management frameworks and stress testing.
• Examining the role of central bank oversight in ensuring the liquidity resilience of systemically important FMIs with cross-border activities.
• Understanding the implications of cross-border collateral management for FMI liquidity.

Module 14: Case Studies in Supervising Cross-Border Capital Flows and Liquidity Risks

• Analyzing real-world examples of financial crises and episodes of significant capital flow volatility and their impact on systemic liquidity for your module.
• Examining the policy responses and supervisory interventions implemented by central banks in different jurisdictions.
• Understanding the lessons learned from past experiences in managing cross-border liquidity risks.
• Exploring case studies of successful and less successful approaches to monitoring and mitigating these risks.
• Fostering interactive discussions and comparative analysis of practical experiences.

Module 15: Developing a Comprehensive Strategy for Supervising Cross-Border Capital Flows and Systemic Liquidity Risks

• Guiding participants in developing a strategic framework for effectively supervising cross-border capital flows and managing associated systemic liquidity risks within their own jurisdictions for your module.
• Defining clear objectives and priorities for monitoring and mitigating these risks.
• Assessing the necessary data collection capabilities, analytical tools, and policy instruments.
• Developing a roadmap for implementing enhanced monitoring, early warning systems, and macroprudential measures.
• Planning for continuous learning, adaptation, and international collaboration in this critical area of central banking.

Training Approach

This course will be delivered by our skilled trainers who have vast knowledge and experience as expert professionals in the fields. The course is taught in English and through a mix of theory, practical activities, group discussion and case studies. Course manuals and additional training materials will be provided to the participants upon completion of the training.

Tailor-Made Course

This course can also be tailor-made to meet organization requirement. For further inquiries, please contact us on: Email: info@skillsforafrica.org, training@skillsforafrica.org  Tel: +254 702 249 449

Training Venue

The training will be held at our Skills for Africa Training Institute Training Centre. We also offer training for a group at requested location all over the world. The course fee covers the course tuition, training materials, two break refreshments, and buffet lunch.

Visa application, travel expenses, airport transfers, dinners, accommodation, insurance, and other personal expenses are catered by the participant

Certification

Participants will be issued with Skills for Africa Training Institute certificate upon completion of this course.

Airport Pickup and Accommodation

Airport pickup and accommodation is arranged upon request. For booking contact our Training Coordinator through Email: info@skillsforafrica.org, training@skillsforafrica.org  Tel: +254 702 249 449

Terms of Payment: Unless otherwise agreed between the two parties’ payment of the course fee should be done 7 working days before commencement of the training.