Safeguarding Stability: Macroprudential Supervision & Systemic Risk In Capital Markets Training Course

Introduction

The interconnected nature of modern financial systems necessitates a proactive approach to identifying, assessing, and mitigating systemic risks within capital markets. This comprehensive training course delves into the critical domain of macroprudential supervision, equipping participants with the essential tools and frameworks to safeguard financial stability. Participants will gain a deep understanding of the sources and transmission channels of systemic risk, learn how to utilize various macroprudential instruments, and develop effective strategies for assessing and mitigating threats to the broader financial system arising from capital market activities. Mastering macroprudential supervision and systemic risk in capital markets is paramount for maintaining financial resilience and preventing widespread economic crises.

This intensive training course explores the theoretical underpinnings of systemic risk in capital markets, including contagion effects, interconnectedness, and procyclicality. We will examine a range of macroprudential policy tools, such as countercyclical capital buffers, leverage ratios, and sectoral risk weights, and their application in mitigating identified systemic risks. Participants will learn practical frameworks for assessing vulnerabilities within capital markets, including early warning indicators and stress testing methodologies. The training course emphasizes the crucial role of macroprudential supervision in complementing microprudential regulation to ensure the overall stability and resilience of the financial system.

Target Audience

• Central Bank Officials
• Financial Regulators
• Macroprudential Policy Analysts
• Risk Management Professionals
• Financial Stability Experts
• Economists
• Banking Supervisors

Course Objectives

• Understand the concept of systemic risk and its various sources and transmission channels within capital markets.
• Learn the theoretical foundations and objectives of macroprudential supervision.
• Identify key macroprudential policy tools and their mechanisms for mitigating systemic risks.
• Develop frameworks for assessing systemic vulnerabilities in capital market structures and activities.
• Understand the application of early warning indicators and macroprudential stress testing methodologies.
• Analyze the interactions and complementarities between macroprudential and microprudential supervision.
• Learn about international best practices and regulatory standards in macroprudential policy.
• Understand the challenges and complexities of implementing macroprudential policies in practice.
• Explore the role of macroprudential supervision in managing financial cycles and preventing asset bubbles.
• Analyze the application of macroprudential tools to specific sectors within capital markets (e.g., housing, non-bank financial institutions).
• Understand the importance of cross-border cooperation in macroprudential supervision.
• Explore the use of data and modeling techniques in systemic risk assessment and macroprudential policy formulation.
• Learn about emerging trends and challenges in macroprudential supervision of capital markets.

Duration

10 Days

Course content

Module 1: Understanding Systemic Risk in Capital Markets

• Defining systemic risk and differentiating it from idiosyncratic risk for your module.
• Exploring the sources of systemic risk in capital markets: contagion, interconnectedness, common exposures.
• Analyzing the role of market infrastructure (e.g., CCPs, payment systems) in systemic risk transmission.
• Understanding procyclicality and its amplification of systemic vulnerabilities.
• Examining historical examples of systemic crises originating in or amplified by capital markets.

Module 2: The Rationale and Objectives of Macroprudential Supervision

• Understanding the limitations of microprudential supervision in addressing systemic risk for your module.
• Defining the objectives of macroprudential policy: preventing the build-up of systemic risk and enhancing the resilience of the financial system.
• Exploring the institutional frameworks for macroprudential supervision and the roles of different authorities.
• Analyzing the principles of macroprudential policy: time variation, cross-section, macro relevance.
• Understanding the relationship between macroprudential policy and other policy domains (e.g., monetary policy).

Module 3: Key Macroprudential Policy Tools and Their Mechanisms

• Analyzing capital-based macroprudential tools: countercyclical capital buffers, systemic risk buffers, leverage ratios for your module.
• Exploring liquidity-based macroprudential tools: liquidity coverage ratios, net stable funding ratios.
• Understanding borrower-based macroprudential tools: loan-to-value ratios, debt-to-income ratios.
• Examining macroprudential tools targeting specific sectors: real estate, non-bank financial institutions.
• Analyzing the intended mechanisms and potential side effects of different macroprudential instruments.

Module 4: Frameworks for Assessing Systemic Vulnerabilities

• Understanding the importance of identifying and monitoring systemic vulnerabilities in capital markets for your module.
• Exploring frameworks for assessing interconnectedness and contagion risk.
• Analyzing indicators of excessive risk-taking and asset price bubbles.
• Examining vulnerabilities in funding markets and liquidity conditions.
• Understanding the role of network analysis in mapping systemic linkages.

Module 5: Early Warning Indicators and Macroprudential Stress Testing

• Identifying key early warning indicators for systemic risk in capital markets (e.g., credit growth, asset prices, funding spreads) for your module.
• Understanding the principles and methodologies of macroprudential stress testing.
• Exploring different approaches to designing and conducting system-wide stress tests.
• Analyzing the use of stress testing for informing macroprudential policy decisions.
• Examining the challenges and limitations of macroprudential stress testing.

Module 6: The Interplay Between Macroprudential and Microprudential Supervision

• Understanding the distinct but complementary roles of macroprudential and microprudential supervision for your module.
• Analyzing the potential interactions and overlaps between the two approaches.
• Exploring the need for coordination and information sharing between microprudential supervisors and macroprudential authorities.
• Examining how microprudential data can inform macroprudential risk assessments.
• Understanding the concept of "leaning against the wind" in the context of both policy domains.

Module 7: International Best Practices and Regulatory Standards in Macroprudential Policy

• Reviewing international standards and guidance on macroprudential policy (e.g., FSB recommendations, Basel Committee frameworks) for your module.
• Analyzing the experiences of different jurisdictions in implementing macroprudential policies.
• Understanding the challenges of cross-country comparisons and policy transferability.
• Exploring the role of international cooperation in developing and implementing macroprudential frameworks.
• Examining the ongoing evolution of international macroprudential standards.

Module 8: Challenges and Complexities of Implementing Macroprudential Policies

• Understanding the political economy challenges and potential resistance to macroprudential interventions for your module.
• Analyzing the difficulties in calibrating and timing macroprudential policy actions.
• Exploring the potential for circumvention and regulatory arbitrage.
• Addressing data gaps and limitations in monitoring systemic risks.
• Understanding the communication challenges associated with macroprudential policy.

Module 9: Macroprudential Policy and the Management of Financial Cycles

• Understanding the role of macroprudential policy in mitigating the build-up of vulnerabilities during financial booms for your module.
• Analyzing the use of countercyclical tools to dampen excessive credit growth and asset price inflation.
• Exploring the effectiveness of macroprudential policies in managing credit and asset price cycles.
• Understanding the interaction between macroprudential policy and monetary policy in managing financial cycles.
• Examining the challenges of identifying and responding to financial cycle imbalances.

Module 10: Sector-Specific Macroprudential Policies in Capital Markets

• Analyzing the application of macroprudential tools to address specific risks within the housing sector (e.g., LTV, DTI limits) for your module.
• Exploring macroprudential policies targeting risks in non-bank financial institutions (e.g., liquidity requirements, leverage limits).
• Understanding the use of macroprudential tools to manage risks in securities markets and derivatives.
• Examining the application of macroprudential policies to address risks from cross-border capital flows.
• Analyzing the effectiveness and potential unintended consequences of sector-specific macroprudential measures.

Module 11: Cross-Border Cooperation in Macroprudential Supervision

• Understanding the importance of international cooperation in addressing systemic risks in globalized capital markets for your module.
• Analyzing the challenges of coordinating macroprudential policies across jurisdictions.
• Exploring mechanisms for information sharing and policy coordination among national authorities.
• Understanding the role of international bodies in facilitating macroprudential cooperation.
• Examining the implications of cross-border spillovers of macroprudential policies.

Module 12: Data and Modeling Techniques for Systemic Risk Assessment and Policy Formulation

• Exploring the types of data used in systemic risk assessment and macroprudential policy analysis for your module.
• Understanding network analysis techniques for mapping financial interconnectedness.
• Analyzing the use of econometric models and simulations for assessing systemic risk and policy impacts.
• Examining the application of machine learning and artificial intelligence in systemic risk analysis.
• Understanding the challenges and limitations of data and modeling in macroprudential policymaking.

Module 13: Emerging Trends and Challenges in Macroprudential Supervision of Capital Markets

• Analyzing the implications of FinTech and digitalization for systemic risk in capital markets and macroprudential supervision for your module.
• Exploring the macroprudential challenges posed by crypto-assets and decentralized finance (DeFi).
• Understanding the role of macroprudential policy in addressing climate-related financial risks.
• Examining the evolving landscape of non-bank financial intermediation and its systemic implications.
• Discussing the future directions and priorities for macroprudential supervision of capital markets.

Module 14: Case Studies in Macroprudential Policy Implementation

• Analyzing real-world examples of the implementation of different macroprudential policies in various jurisdictions for your module.
• Examining the motivations, design, and effectiveness of specific policy interventions.
• Understanding the political and economic context surrounding policy implementation.
• Discussing the challenges and lessons learned from practical experience.
• Fostering interactive discussions and knowledge sharing based on case studies.

Module 15: Developing a Macroprudential Supervision Framework

• Guiding participants in developing a comprehensive macroprudential supervision framework relevant to their institutional context for your module.
• Defining clear objectives and mandates for macroprudential policy.
• Establishing institutional arrangements and coordination mechanisms.
• Identifying key systemic risks and relevant macroprudential tools.
• Developing strategies for data collection, risk assessment, policy implementation, and communication.

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.