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Distr. LIMITED CS/CMI/FSDSS/7/5 November , 2012 Original: ENGLISH COMMON MARKET FOR EASTERN AND SOUTHERN AFRICA Seventh Meeting of the Financial System Development and Stability Sub-Committee Meeting 3 November 2012 Nairobi, Kenya REPORT OF THE SEVENTH MEETING OF THE FINANCIAL SYSTEM AND STABILITY SUB-COMMITTEE MEETING 2012 - (IZ-mmn/mkc) CS/CMI/FSDSS/7/5 Page 1 A. INTRODUCTION 1. The 17th Meeting of the COMESA Committee of Governors of Central Bank which was held in Swaziland in November 2011, emphasised that the implementation of the COMESA Framework for Financial System Stability requires the creation of a COMESA database which can be consulted by member countries in production of financial stability reports. The Governors were convinced that such database will enable member countries who have not yet started producing such reports to learn from the example of other member countries. This will also enable interested stakeholders to gauge the degree of harmonisation and also act as a compliance benchmark. The Governors therefore mandated the COMESA Monetary Institute to organise a meeting on selected topics on financial system stability which can enhance the capacity of member central banks to produce Financial Stability Reports. 2. COMESA Monetary Institute, therefore, organised a 5 day meeting from 29 October 2012 to 2 November 2012 on the preparation of Forward Looking Financial Stability Reports by member countries. 3. The key objectives of the meeting were to: a. b. c. Provide hands on training to meeting participants on the preparation of forward looking financial stability reports; Discuss current issues on financial system stability; and Share experiences in the preparation of forward looking financial stability reports. 4. The report of the workshop was submitted to the Seventh Meeting of the Financial System Development and Stability Sub-Committee which was held on November 3, 2012. B. ATTENDANCE, OPENING OF THE MEETING,ELECTION OF THE BUREAU, ADOPTION OF THE AGENDA AND ORGANISATION OF WORK 5. The meeting was attended by delegates from Burundi, Egypt, Eritrea, Kenya, Madagascar, Malawi, Mauritius, Libya, Rwanda, Seychelles, Sudan, Uganda, Swaziland and Zimbabwe. The list of participants is in Annex II. Opening of the Meeting 6. The Chairman welcomed the delegates and called the meeting to order. Election of the Bureau 7. The following central banks were elected as members of the Bureau for the SubCommittee i. ii. National Bank of Rwanda, Chairman, Reserve Bank of Malawi: Rapportuer. CS/CMI/FSDSS/7/5 Page 2 Adoption of the Agenda and Organisation of Work (Agenda item 2) 8. The meeting adopted the following agenda: a) b) c) Opening of the meeting Adoption of the Agenda and Organisation of Work Presentations on the following: i) Country Reports on Implementation of the COMESA Assessment Framework for Financial System Stability; ii) Overview of the Financial Stability Assessment Process: The role of Financial Stability Departments, possible institutional arrangements and global trends iii) Current Issues on Financial System Stability at the Global Level iv) Overview of the COMESA Financial Stability Assessment Framework v) The Financial Stability Assessment Process (FISTAS) vi) Macroprudential Policy & Systemic Risk vii) Systemic Risk & Systemically Important Financial Institutions vii) Macrofinancial linkages, Transmission Channels & and their Implications on Financial Stability viii) Developments and Trends in Stress Testing ix) Forward Looking Financial Stability Reports: Design, Developments and the Way Forward x) Building a Framework for Assessing Systemic Risk d) e) f) g) h) 9. Group Exercises on the Preparation of Forward Looking Financial; Stability Reports Recommendations for 2013 Work Plan of the COMESA Financial Systems Development and Stability Sub-Committee Wrap Up Session Any Other Business; Adoption of the Report and Closure of the Meeting. The meeting agreed on the following hours of work: Morning Afternoon C. 09.00 hours 14.00 hours - 12.30 hours 17.00 hours ACCOUNT OF PROCEEDINGS Country Reports on Implementation of the COMESA Assessment Framework for Financial System Stability 10. The meeting noted that member countries reported the status of their implementation of the COMESA Assessment Framework of Financial Stability which is contained in Annex I of the report. See table 1 for a summary of the status of implementation of the COMESA Assessment Framework for Financial System Stability. CS/CMI/FSDSS/7/5 Page 3 11. Regarding the member country reports, the meeting noted that most COMESA member states have set up Financial Stability Units. The member states are at various stages of setting up the Financial Stability Committees. Member countries are still working toward the conduct of SHIELDS ratings of financial stability once the requsite institutional and logistical arrangements have been finalised. It was further noted that financial stability assessments and macroprudential supervision are new concepts, which have gained increased attention following the global financial crisis. As such, there are still a number of challenges in respect of resources and skills endowment. 12. Following the sharing of country experiences, the meeting was informed that building a robust financial stability assessment regimes require an ex-ante commitment of substantial time and resources. There is also need for extensive training on financial stability assessments, macro prudential assessments, macro stress testing, and preparation of forward looking financial stability reports. 13. Given the multi-faceted nature of financial stability assessments, the meeting emphasized that reliance should be placed on a broad range of specialist skills. As such supervisory authorities may need to rethink appropriate mix of skills and expertise and hire specialists with competences in such fields as economics, finance, banking, econometrics, statistics, law, and accounting. 14. The meeting cautioned that care should be taken to avoid duplication of effort. Cooperation with internal (within the institution) and external stakeholders is needed. Establishment of good working contacts with other regulatory and supervisory agencies facilitates easy exchange of information. 15. The meeting also emphasized that reliance may be placed on simple methodologies that are well understood as opposed to adoption of sophisticated models which may be ill-fitted to the fundamental structural, organizational and institutional conditions on the ground. CS/CMI/FSDSS/7/5 Page 4 Table 1. Status of Implementation of the COMESA Financial Stability Assessment Framework by Twelve Member Countries No. Task Activity 1. Financial Stability Unit Establish Financial Stability Unit 2. Financial Stability Committee Establish a multidisciplinary Financial Stability Committee 3. Strategic Plan Develop in-country Strategic Implementation Plan covering institutional structures and chosen methodologies and/or modalities for: Information gathering; Data analysis; Interpretation of the results; Policy recommendations; and Policy implementation. Completion Date Status of Implementation by member countries 31 January Burundi, Egypt, 2012 Eritrea(WI), Kenya, Mauritius, Rwanda, Sudan, (WIP) Uganda, Madagscar (WIP)*,Malawi, Seychelles (WIP), Swaziland ,Zimbabwe 31 March 2012 Burundi (WIP), Egypt), Eritrea (WIP), Kenya, Mauritius, Malawi Rwanda, Sudan, Uganda, Madagascar (WIP),Swaziland (WIP) Zimbabwe 31 March 2012 Burundi (WIP), Egypt), Eritrea (WIP), Kenya, Mauritius, Malawi Rwanda (WIP), Sudan (WIP), Uganda, Madagscar (WIP), Seychelles(WIP), Swaziland (WIP),Zimbabwe (WIP) CS/CMI/FSDSS/7/5 Page 5 4. Action Plan Develop in-country 31 March 2012 Action Plan for Implementation of COMESA Framework covering: conduct of consultative meetings and/or meetings with other stakeholders; establishment of technical subcommittee where necessary; issuance of customized guidance on on-going surveillance, diagnostic assessment, and policy actions; production of Financial Stability Reports; Review of legislation where necessary; and Roll-out of the Framework. Burundi (WIP), Egypt (WIP), Eritrea (WIP), Kenya, Malawi (WIP), Mauritius, Rwanda, Sudan, Uganda, Madagascar (WIP), Seychelles(WIP), Swaziland (WIP), Zimbabwe (WIP) 5. Financial Stability Assessment Implement Financial Stability Assessment Framework incorporating: Financial Stability Report (FSR) in Prescribed Format; Financial Stability Assessment Matrix; GLYOR five-tier coding system; Financial Soundness Indicators (FSIs); Macro-prudential analysis; Stress testing; Household Sector Survey Results; and SHIELDS Rating System Burundi (WIP), Egypt (WIP), Eritrea (WIP), Kenya, Mauritius, Malawi (WIP), Rwanda (WIP), Sudan (WIP), Uganda (WIP), Madagascar (WIP), Seychelles(WIP); Swaziland (WIP), Zimbabwe (WIP) September 2011 CS/CMI/FSDSS/7/5 Page 6 6. Financial Stability Assessment Reports Electronic submission of Financial Stability Assessment Reports to the Secretariat for posting onto the COMESA website October 2011 7. Financial Soundness Indicators Electronic submission of Financial Soundness Indicators (FSIs) to the Secretariat for posting onto the COMESA website 60 days after end of each quarter with effect from December 2010 8. Monitor compliance with the 25 Basel Core Principles for Effective Banking Supervision Member countries conduct selfevaluations March 2011 Burundi (WIP), Egypt (WIP) , Kenya, Mauritius, Malawai (WIP), Rwanda, Sudan (WIP), Uganda, Madagascar(WIP), Seychelles (WIP), Zimbabwe (WIP) Burundi Egypt (, Eretria (WIP), Kenya, Mauritius,Malawi, Rwanda, Sudan (), Uganda, Madagascar (WIP), Seychelles, Zimbabwe Burundi, Egypt, Eretria (WIP), Kenya, Mauritius, Malawi Rwanda, Sudan, Uganda, Madagascar(WIP), Seychelles(WIP) Zimbabwe *WIP – Work in Progress Recommendation 16. The meeting recommended that member central banks are urged to fully implement of the COMESA Framework for Assessment of Financial System Stability. CS/CMI/FSDSS/7/5 Page 7 Overview of the Financial Stability Assessment Process: The role of Financial Stability Departments, possible institutional arrangements and global trends 17. Under this agenda item, the meeting was informed the different role of the Financial Stability Departments. The meeting observed that t Central Banks should play a prominent role in the financial stability remit, since they have expertise in monitoring macroeconomic and financial market developments. This expertise could help shape policies aimed at containing the build-up of systemic risks. In addition, their existing roles in monetary policy and payment systems, makes central banks well placed to analyze systemic risks and the impact of individual bank failure. This analytical expertise can help achieve greater clarity about the benefits and costs of macroprudential policies. Furthermore, they also bring much-needed reputation and independence. Finally, Central Banks have strong institutional incentives to ensure that macroprudential policies are effective—because if they are not, central banks will have to take costly corrective measures. 18. The meeting noted that for Central Banks to undertake the macroprudential mandate effectively, they must have the following characteristics. First, the objective of macroprudential policy should be clearly spelt out. This will enhance accountability and reduce the risk of political pressures. Second, the institutional arrangements must be country specific because one size does not fit all. However, whatever institutional arrangement is chosen, Central Banks should play a leading role. In addition, the tasks, powers and instruments must be clarified. There must be transparency and accountability - prerequisites for good governance. Finally, the body undertaking macroprudential policy should be independent to strengthen credibility. 19. The meeting was informed that the Financial Stability Departments should Work closely with other financial system regulators namely: financial intermediaries (including banks, insurers, pension funds, etc); financial markets (as alternative sources of finance and as links between institutions); financial system infrastructures (clearance, payment and settlement as well as legal, regulatory, accounting and supervisory infrastructures) The meeting was also informed that the activities of financial stability Departments must include among other things the following: Surveillance & monitoring to analyse vulnerabilities in the macro economy and financial sector, conduct risk identification and design early warning systems. Analysis & reporting through the Financial Stability Report (FSR) that is underpinned by stress testing exercises that assess and quantify systemic risk, use of robust models, risk calibration systems and financial system risk profiles. The units must compile and maintain a robust data base of FSI’s Macroprudential policy formulation and analysis is an important role for financial stability departments. The Departments must provide timely assessment and policy advice. They should enhance arrangements for managing a systemic financial crisis (crisis response and management). In addition, they should coordinate policy on financial stability issues between all the financial sector regulators. Conduct research and analyse developments within regional and international markets. They should prepare frameworks for financial stability analysis for their countries. Conduct Financial Infrastructure Oversight. The departments should be responsible for macro-prudential regulation of the payment systems. They should take the lead in oversight the payments systems as a whole. To identify, manage and limit systemic risks; undertake studies to identify the key risks that may escalate into a systemic crisis in the payment system, payment instruments, infrastructure used to transfer large-value payments between banks and other non bank financial institutions. CS/CMI/FSDSS/7/5 Page 8 Communication via the Financial Stability Reports. The FSR’s should aim to: review the health of the aggregate financial system, identify and analyse potential future threats to systemic stability, communicate such assessments to the public and focus attention of policy makers on financial stability issues in order to stimulate debate regarding pertinent issues. Focal point for participating in international efforts to address the issue of systemic stability. The units should track international developments in techniques of analysis and measurement as well as policy measures to curb vulnerabilities. They should evaluate relevance, incorporate those appropriate to their circumstances, devote resources to study new techniques of analyzing vulnerability and be involved in cross border crisis mitigation. For Financial Stability Departments to adequately execute their role, the following are the prerequisites: The need for a clear understanding of what constitutes macroprudential policy. It is important to lay out a clear understanding of what macroprudential policy is, and what it is not; and what it can and cannot do. It must be clear that macroprudential policy seeks to limit systemic financial risks by using primarily prudential tools. These prudential tools are designed to prevent financial instability and the associated social and economic costs. Financial stability is a shared responsibility. No matter how different policy mandates are structured, ensuring financial stability is a shared responsibility. Mechanisms must be established for coordination across policies. In the design of macroprudential policy frameworks, one size does not fit all. However, it must be ensured that all the other regulatory and supervisory agencies are involved in an adequate manner. Macroprudential policy is necessary—but it is not a magic bullet. Macroprudential policy is in its infancy. Many issues remain unresolved, for example, we are yet to obtain an appropriate understanding as well as measurement of systemic risk. Countries should ensure that all systemic risks are addressed and all potential policy conflicts managed through cooperation among national authorities. Recommendations 20. The meeting recommended the following: i. ii. iii. Central bank are urged to develop sound macroprudential policy framework. Central banks are urged to build human skills on a sustainabe basis and infrastructural requirements for the conduct of macroprudential policy analysis. Central banks should ensure that international cooperation is increased to ensure the consistent application of macroprudential policies at national levels Current Issues on Financial System Stability at the Global Level 21. The meeting observed the following salient points under this presentation: The sources of risk to financial stability include sovereign debt, distress from systemically important banks, spill overs and contagion from external financial shocks and cyclicality of credit growth. In addition, common exposures to real estate property markets and the global demand for safe assets were noted as emerging risks. The financial impact of longevity risk, cross CS/CMI/FSDSS/7/5 Page 9 border financial activity, the redesign of recovery and resolution plans were some of the areas being considered for regulatory reform at the global level. 22. The surveillance by the IMF helps to highlight global systemic vulnerabilities. In addition, it examines possible spill overs that may occur across markets (e.g. US Subprime mortgages to global interbank market) or across countries (e.g. Emerging Market financing, European sovereign crisis spill overs). In addition, it assists to provide policy advice on financial sector reform and in assuring level playing fields. 23. The October 2012 assessment indicates that the key risks to global financial system stability had increased since the April 2012 GFSR, as confidence in the global financial system had become very fragile. However, significant new efforts by European policymakers have relieved investors’ biggest fears, but the euro area crisis remains the principal source of concern. 24. The unfolding euro area crisis has generated safe-haven flows to countries like the United States and Japan. These flows have pushed government funding costs to historical lows, but both countries continue to face significant fiscal challenges. The crisis has spurred a host of regulatory reforms which are likely to produce a safer banking system over time. The success of the regulatory reforms depends on effective implementation and strong supervision. Without those elements, regulatory reforms may fail to secure greater financial stability. 25. Whatever, financial regulatory measures are adopted to enhance growth and stability, they are likely to be effective only if they are implemented correctly. The quality of domestic and global regulation and supervision is essential. Recommendations 26. The meeting recommended the following: i) ii) iii) iv) Central banks are urged to set up supervisory colleges or other means to discuss the cross border business activities of financial institutions and other banking supervision and regulation issues. Regulators should design and implement measures to curb excessive credit growth during the upswing of the economic cycle. Regulators need to design and implement measures for monitoring foreign liabilities of banks and capital flows. Central banks should strengthen the supervision of systemically important banks. and, where these banks are subsidiaries of international or regional banks, build more effective links with their home country supervisors. Overview of the COMESA Financial Stability Assessment Framework 27. The meeting observed that financial stability assessments and macroprudential supervision are new concepts, which have gained increased attention following the Global Financial Crisis. As such, there are still a number of challenges in respect of resources and sills endowment. 28. The meeting agreed that Financial Stability is often characterised as a multifaceted phenomenon prone to various internal and external shocks. Accordingly, the COMESA Framework for Financial Stability Assessment provides for systematic monitoring of the individual parts of the financial system (institutions, markets, and infrastructure); components of the real economy (households, firms, & public sector); global macro-financial developments; and event risk (e.g. catastrophes). CS/CMI/FSDSS/7/5 Page 10 29. The meeting also agreed that the SHIELDS rating system has inbuilt flexibility which allows financial stability assessment practitioners to employ the most appropriate tools and instruments in accordance with developments in the real and financial sectors. 30. Regarding the choice of an appropriate regulatory structure to facilitate effective financial stability assessment it was noted that there is no one best solution as regulatory architecture varies across jurisdictions. 31. The meeting was informed that in some jurisdictions the Financial Stability Unit (FSU) is a subset of the Banking Supervision Department while in some the FSU is housed in Economic Research. One approach is to set up a stand alone FSU. 32. The meeting was informed that key conceptual issues to consider are accesses to data, propensity to act and independence. Financial stability units are usually established within central banks to draw on accumulated prudential and/or financial system data as well as economic research competences. Propensity to act considers responsiveness, incentives and competences to act on financial stability developments. The Financial Stability Assessment Process (FiSTAs) 33. The meeting observed that financial stability is regarded as an important economic policy objective in most countries. In practice financial stability assessment frameworks in some central banks are largely under-developed with no clear institutional objective and/or legal backing. Some countries have no standardised frameworks to inform the gathering, processing, analysis and/or interpretation of financial and macroeconomic indicators for financial stability purposes. As such, many countries still produce financial stability reports lacking in overall financial stability assessment, forward looking outlook and granularity. 34. The meeting agreed that the utilisation of a coherent Framework for Financial Stability Assessment will facilitate comparison of financial stability assessments over time within a given country and across nations. 35. The meeting also agreed that the COMESA Financial Stability Assessment Framework provides a structured, comprehensive, and conceptually sound analytical framework for the assessment and measurement of systemic stability over time and across nations, via the SHIELDS rating system. 36. The meeting was informed that the Financial Stability Assessment System (FiSTAs) provides a standardised but flexible format by which macroprudential authorities may identify, analyse, measure, mitigate, monitor and report financial stability issues, risks and vulnerabilities.The SHIELDS rating system also provides structure and discipline to the process of continuous information gathering, analysis, and monitoring; as well as formulation of risk mitigation strategies. By construction the SHIELDS rating system can accommodate any theoretical and empirical advances, judgemental and professional insights as part of the overall assessment of financial stability. 37. The meeting also agreed that the SHIELDS rating system is implementable in all countries notwithstanding their level of regulatory sophistication. The framework relies, for its inputs, on concepts and international standards that are well established in the microprudential supervision fraternity. Most bank examiners are familiar with Financial Soundness Indicators as well as stress testing. The multi-component construction of SHIELDS, for instance, is familiar to most bank examiners using CAMELS rating system. The SHIELDS rating system, like CAMELS, is based on a comprehensive quantitative and qualitative evaluation criteria. It was further noted that the rating of Sovereign risk, also makes use of a number of cross sectoral factors. CS/CMI/FSDSS/7/5 Page 11 38. The meeting agreed that implementation of the COMESA Framework for Financial Stability Assessment by member countries will facilitate comparison of financial stability assessments over time within a given country and across nations. 39. The meeting also agreed that adherence to the framework by COMESA member countries will provide minimum benchmarks as well as ensure uniformity in the assessment of financial stability in the region, which is an essential building block towards the attainment of regional harmonisation. 40. The meeting further agreed that timely production of COMESA-wide Financial Stability Reports will complement reviews produced by central banks of the member countries. 41. The meeting was informed that there were calls for regional benchmarks to facilitate implementation of the SHIELDS rating system. The consultants advised that regional benchmarks may not be desirable where there is no full monetary and fiscal union. The best way to go may be the development of an implementation manual given the country specific circumstances of member countries. 42. The meeting agreed that there is still room for great improvement toward implementation of the COMESA Framework for Financial System Stability, by way of aggressive in-country meetings and practical missions focusing on macroprudential analysis, overall assessment of financial stability and production of forward looking financial stability reports. Recommendation 43. CMI should develop an implementation manual to facilitate effective roll out of the SHIELDS rating system. The financial System Development and Stability Sub-Committee should validate the Manual before its implementation. Macroprudential Policy & Systemic Risk 44. item: The meeting noted the following salient points of the presentation under this agenda 45. The Global Financial Crisis (GFC) rekindled interest in macro-prudential analysis to supplement micro-prudential analysis. It noted that the concept of macroprudential analysis is not new, and has been traced to unpublished documents in the 1970s. The GFC, however, reconfirmed that financial systems have inherent tendencies towards booms and busts, whose depth and severity are amplified by the highly interconnected nature of financial institutions and markets, as well as feedback effects between the macro economy and the financial system. Cognisant of these challenges, on November 12, 2010, the G-20 leaders asked the Financial Stability Board (FSB), International Monetary Fund (IMF), and the Bank of International Settlements (BIS) to develop and fine-tune macroprudential policy frameworks. 46. Macroprudential analysis is a key building block of any policy framework for vulnerability analysis. Macroprudential analysis focuses on the health and stability of financial systems, whereas microprudential analysis deals with the safety and soundness of individual financial institutions. 47. Macroprudential analysis is a methodological tool that helps with the identification, quantification and qualification of the soundness and vulnerabilities of the overall financial systems. It uses aggregated prudential data to obtain direct information on the current health of financial institutions; macroeconomic data to help set the analysis in the context of broader economic and financial trends; stress tests and scenario analysis to determine the sensitivity of CS/CMI/FSDSS/7/5 Page 12 the financial system to macroeconomic shocks; market based information –such as prices and yields of financial instruments and credit ratings as complementary variables conveying market perceptions of the health of financial institutions; and qualitative information on institutional and regulatory frameworks to help interpret developments in prudential variables. Structural data including aggregates of the size of the main segments of the financial system, ownership structures, and concentrations, typically supplement the analysis. 48. The quantitative macroprudential analysis typically involves monitoring, at a suitable level of aggregation, a range of FSIs of banks, of key non-bank financial sectors and relevant non-financial sectors, analyzing their economic and institutional determinants, and examining the impact of various plausible, but exceptional macroeconomic and institutional shocks on the FSIs. Such monitoring and analysis of FSIs, referred to as macroprudential surveillance, includes the stress testing of the system and helps identify the key sources of risks and vulnerabilities. 49. The macroprudential surveillance also encompasses a surveillance of financial markets that helps assess likelihood of economic shocks, and an analysis of macrofinancial linkages that focuses on the extent to which shifts in financial soundness may itself affect macroeconomic and real sector developments. This combination of approaches captures the two way linkages between macro economy and financial soundness in formulating an overall stability assessment. 50. The analysis should consider the linkages of domestic financial markets to global markets, and the extent to which government policies (taxes, subsidies, monetary and exchange regimes etc) affect market discipline and risk taking. 51. Quantitative analysis should be complemented by qualitative assessments of the effectiveness of financial sector supervision and robustness of financial infrastructure. Qualitative assessments help identify the key institutional and policy issues mitigatory to the identified risks and vulnerabilities and help inform overall stability assessment and policy actions 52. A policy that uses primarily prudential tools to limit systemic or system-wide financial risk, thereby limiting the incidence of disruptions in the provision of key financial services that can have serious consequences for the real economy, by: (a) dampening the build-up of financial imbalances and building defences that contain the speed and sharpness of subsequent downswings and their effects on the economy; and (b) identifying and addressing common exposures, risk concentrations, linkages and interdependencies that are sources of contagion and spillover risks that may jeopardise the functioning of the system as a whole. CS/CMI/FSDSS/7/5 Page 13 53. Macroprudential policy has two dimensions (a) time dimension that focuses on procyclicality in the financial system; and (b) cross-sectoral dimension addressing “fault lines” arising from risk concentrations and balance sheet linkages. The goal of on-going surveillance is become aware of developing risks before they result in a crisis. This calls for use of many prudential tools on an on-going basis and as needed to reduce systemic risk and increase resilience. Continuous preventive monitoring requires ability to analyze several types of data at the firm, market, national, and international level on a regular basis. Given complementary nature of macroprudential and other areas of economic policy, agencies in charge of its implementation should inform and be informed by monetary, fiscal, and other government policies. Systemic Risk & Systemically Important Financial Institutions 54. item: The meeting was informed the following highlights of the presentation under this agenda 55. A representative definition of systemic risk following the work of the IMF, FSB and BIS is “a risk of disruption of financial services that is caused by an impairment of all or parts of the financial system and has the potential to have serious negative consequences for the real economy.” 56. Systemic risk takes a system-wide perspective rather than the soundness of individual markets/institutions. Systemic risk is endogenous as collective behaviour of financial institutions can result in crystallisation of vulnerabilities and severe disruptions to the financial system, which could be self-feeding, pro-cyclical and mutating. 57. Macroprudential policy does not seek to eliminate risk and volatility entirely. Risk and volatility are essential elements of a properly functioning financial system. Macroprudential policy seeks to enhance the resilience of the financial system and to prevent risk and volatility from threatening financial stability. A strong Macroprudential Policy does not, therefore, prevent financial crises but minimises their impact. It follows that macroprudential policy, like macroeconomic policy, is both prospective and preventive, and not merely a set of tools to be used upon the near failure of systemically important financial institutions. 58. According to the FSB, systemically important financial institutions may be identified on the basis of three key criteria: i. size (the volume of financial services provided by the individual component of the financial system); ii. substitutability (the extent to which other components of the system can provide the same services in the events of a failure); and iii. Interconnectedness (linkages with other components of the system). 59. Systemic importance is often time-dependent, and can change in a crisis. There is need to gather underlying information to assess potential systemic impact at any given time. Application of macrprudential policy must begin before risks have propagated through the system. 60. Macroprudential supervisors must identify, analyse, publish anticipatory guidance on, and address systemic risks as they emerge .A fundamental concern of macroprudential policy is the way interlinkages of financial institutions and markets and their common exposure to CS/CMI/FSDSS/7/5 Page 14 economic variables create risks, whose propagation may increase riskiness and fragility of the whole financial system. 61. Systemic risk has two dimensions, namely a cross-sectional dimension, and a time dimension. 62. Cross sectional dimension pertains to how risk is allocated within the financial system at a point in time. The sources are common exposure and interlinkages leading to domino effect (contagion) or to joint failure. Some of the indicators include mmeasures of interdependence, interlinkages and exposure to common risk factors. The assessment criteria may involve an analysis of funding structures, asset structures, large exposures, hedging activity, financial infrastructure. 63. The degree of interconnectedness and common exposures renders the financial system vulnerable to a rapid propagation of failures. For instance, the failure of Bear Stearns, Lehman Brothers, and AIG, and liquidity challenges of major banks during the GFC thrust the interconnectedness of financial institutions into the public consciousness. 64. Large financial institutions have definitive benefits stemming from economies of scale. Well-managed, large firms can be less risky and often play a key role in resolution actions. It was noted that ideally, as a matter of policy, no institution should be “too big to fail.” In practice small institutions can be ‘systemic as a group’ as otherwise unimportant institutions can become systemic if their problems are seen as representative of broader problems shared by other institutions. 65. Time dimension deals with how aggregate risk in the financial system evolves over time. Source is the pro-cyclicality of financial system. Systemic risk can also arise from herd behaviour by financial institutions, nonfinancial firms, individuals & other activities that cause procyclical movement. Time dimension thus involves the assessment of trends and developments over time. In this perspective, the primary source of risk is procyclicality, while the indicators may include credit and asset price trends, changes in risk premia, liquidity trends, and general underpicing of risk. The assessment criteria may espouse time series analyses, correlations, standard deviation, causality tests, volatility indicators, ‘excessive’ or exceptional trends relative to benchmarks and historical norms. 66. In summary systemic risk builds up through contagion (inter-connectedness) and common exposures; procyclical nature of financial system and prudential regulations; as well as regulatory arbitrage due to limited perimeter of regulation, and financial innovation involving opaque and poorly understood products. 67. Various macroprudential tools which may be deployed to manage systemic risk were discussed. 68. A single macroprudential regulator may be given control over macroprudential tools, along with a well formulated mandate, sufficient authority and resources, professional independence with accountability.A large body of literature favours the Central Bank to be designated as the macroprudential regulator in view of the perceived expertise, reputational authority, deep knowledge of financial markets (and institutions where it is microprudential regulator), handling of monetary policy and experience in handling financial stability issues Macrofinancial linkages, Transmission Channels & and their Implications on Financial Stability 69. item: The meeting noted the following salient points of the presentation under this agenda CS/CMI/FSDSS/7/5 Page 15 70. There is rich and divergent intellectual history of interactions among money, credit, asset prices, inflation, expectations, and business cycles. Some of the perspectives are discussed hereunder for illustrative purposes. Classical economics emphasises the neutrality of the financial system while others, for instance, Schumpeter’s (1936) acknowledged the real effects of finance. 71. Irving Fisher’s Debt-deflation (1933) theories put emphasise on interactions between credit crunches, falls in asset prices, profits, and the general price level in generating a dynamics of deflation and crises. 72. In Arrow-Debreu models there is no specific role for the financial system. Following the Modigliani-Miller theorem (1958) banks and other financial institutions were considered irrelevant. The formalization of Keynes’ theory and the monetarist theory reserved no special role for banks other than money creation. The Efficient Markets Hypothesis (EMH), associated with work of Eugene Fama (1970), Samuelson (1965), Robert Merton (1974), etc wherein asset prices are expected to follow a random walk, does not acknowledge the ‘specialness’ of banking institutions. 73. The development of information asymmetry theories provided roles for banks and other financial intermediaries to mitigate these information problems. Hyman Minsky’s (1963, 1975, 1986) Financial Instability Hypothesis considered financial institutions to be inherently unstable. Keynes’ (1936) “animal spirits” in private investments also leads to cycles “casino economics. 74. Kindleberger’s book Manias, Panics, and Crashes applied Minsky’s and Fisher’s ideas to the role of credit and debt in fuelling booms, via acquisition of speculative assets, and indebtedness makes recovery from crashes and recessions complex and protracted. Literature on Imperfect Markets by George Akerloff, Joseph Stiglitz, Ben Bernanke etc draw several inefficiency results showing sub-optimal equilibrium in financial markets. 75. Credit and financial markets transmit and amplifying the effects of real or monetary shocks on real economic activity, through the so-called credit channel and financial accelerator (Bernanke, 2007) which may be detrimental to financial stability. 76. Analysis of macro-financial linkages focuses on the transmission of shocks through the financial system to the macroeconomy and vice versa, which arises from the many ways in which different non-financial sectors rely on intermediation by the financial sector in order to conduct their activities. 77. For most developing countries the focus is on the banking sector in terms of its relative size in the financial sector, potential for vulnerability, and provision of credit to small to medium enterprises (SMEs). 78. Although the macro-financial linkages differ significantly across countries, the main linkages are likely to derive from: i. The dependence of non-financial sector (e.g. corporate, households, and public sectors) on financing provided by domestic and foreign banks; ii. Deposits and wealth of these sectors placed with the financial sector (that is, domestically owned and foreign controlled financial institutions), which would be at risk in crisis at home or abroad; iii. The role and impact of the banking sector (problems) on the monetary transmission mechanism; and CS/CMI/FSDSS/7/5 Page 16 iv. The financial sector’s holdings of securities issued by, and loans to, the government, such that problems in the financial sector could adversely affect debt sustainability. 79. Analysis of macro-financial linkages is essential as monetary stability and financial stability are connected. A significant disruption in the financial system would affect the implementation and effectiveness of monetary policy, while macroeconomic stability helps reduce risks to financial stability. Thus the fragility of the financial system also depends on macroeconomic conditions. 80. Hence, from a financial stability point of view, the analysis of macro-financial linkages is essential, as it is important to understand the developments in macroeconomic conditions such as disposable income of households and firm, profits, or unemployment and bankruptcy rates, and how these developments affect financial stability. 81. Developments in financial system soundness can have a significant impact on debt sustainability of households, corporations, and governments and debt sustainability problems in different sectors are mutually reinforcing. Debt sustainability problems in the non-financial sectors can further weaken the financial system by affecting the value of loans and securities held by the financial sector. Strong growth in debt burdens, imbalances in asset prices, and national or international macroeconomic disturbances that cause debt servicing abilities or collateral values to decrease, may negatively affect financial stability. 82. Financial dollarization also increases the vulnerability of financial systems to solvency and liquidity risks. Unless liquid dollar liabilities are backed by sufficient liquid dollar assets abroad, banks may run out of dollar liquid reserves and fail to pay off dollar liabilities. Similarly central banks may run out of international reserves to provide dollar lender of last resort support to distressed banks. In highly dollarized countries, it is therefore, necessary that financial stability assessment should thus indicate the extent to which dollarisation is a potential source of vulnerability and suggests appropriate risk mitigation measures. 83. Relevance of these mechanisms will vary over time and across countries, subject to the degree of institutional development, depth, breadth, and liquidity of financial markets, modalities for conducting monetary policy, degree of financial integration with the rest of the world, and other factors. Macroeconometric Modelling and Macrofinancial Linkages 84. item: The meeting observed the following highlights of the presentation under this agenda 85. In practice financial stability is a complex phenomenon dependable on iterative interactions of many risks and feedback effects from financial stability to the real economy. Most academics and practitioners concur there will never be one best model for all purposes, hence the need for a suite of models. 86. Bårdsen, Lindquist and Tsomocos (2006, 15), following Pagan (2003) propose that there is a spectrum of modelling approaches ranging from theory coherency models to data coherency models with little explicit theoretical content as illustrated in the chart below: CS/CMI/FSDSS/7/5 Page 17 87. Under hybrid models the equilibrium relationship among variables is determined by some theoretical specification, while the dynamic adjustment mechanisms are determined by the data. 88. The meeting considered the role and applicability of various approaches to macroeconomic modelling: a. Large scale macroeconomic models b. Unrestricted, Bayesian and structural VARs c. Dynamic stochastic general equilibrium d. Structural cointegration VAR approach 89. The meeting was informed that models used for financial stability purposes should take into account the following characteristics: CS/CMI/FSDSS/7/5 Page 18 Desirable Characteristics for Financial Stability Models No. Characteristic 1. Contagion Description Possibility of interactive contagion due to direct interbank linkages or indirect interactions with other market participants via credit and loans markets. 2. Default Possibility of default as an equilibrium outcome stemming form economic agents’ optimal behaviour to uncertainty. Implies discontinuous non-linear properties which are difficult to model. 3. Missing Financial Markets In real life markets are incomplete or otherwise imperfect. Missing markets justify regulatory policy intervention and analysis of consequences thereof. With incomplete markets, the economy may fail to reach constrained Pareto-optimality while policy intervention may induce welfare improvements. 4. Roles for Money, Banks, Liquidity and Default Risk Modelling systemic risk should incorporate liquidity and incomplete financial markets. As long as money has a distinct role in the economy (not substitutable) liquidity affects both real and nominal sectors. 5. Heterogeneous Agents Agent heterogeneity is an important property for modelling contagion, as well as crisis prevention and management. It provides incentives for inter-bank trading. Assumptions for a representative banks and identical customers are not realistic. 6. Macroeconomic Conditions Financial stability models should incorporate exogenous risk factors and the impact of macrofinancial linkages on stability. Macroeconomic conditions affect the number of bankruptcies, level of unemployment, and the benevolence of banks which may amplify macroeconomic shocks. 7. Structural Microfoundations There is a wide range of models for financial stability analysis stretching from data congruence to theoretical coherence models. 8. Empirically Tractable Theoretical models will not have practical relevance unless they are empirically tractable, i.e. usable to assess financial stability using real data. 9. Forecasting and Policy Analysis Forecasting models should be robust, i.e. invariant to shocks (external events and policy changes). In view of the Lucas Critique (1976) &Goodhart’s Law (1975) models applied for policy analysis should clarify the transmission mechanism involved. 10. Testing Device Potential to test alternative theories of relevance. Act as a reliance reality check in many situations. CS/CMI/FSDSS/7/5 Page 19 90. The meeting noted other econometric techniques which have been utilized in some other jurisdictions, which include: e. Cointegration and Long Run Structural Modelling f. Banking Stability Measures including the Consistent Information Multivariate Density Optimizing (CIMDO) approach; g. Merton Failure Prediction Model; h. Distance to Default and Distance-to-Capital; i. CISS – Composite Indicator of Systemic Stress developed by researchers at the ECB; j. GIFT – Global Index of Financial Turbulance developed at the ECB in 2009 k. MOSES - Model of swedish economic studies; and l. Macro Stress Testing Framework 91. A key consideration in the development of macro financial models is the need for policymakers to understand the macroeconomic effects of macroprudential policy tools, skills,operational applicability thereof, and implications for financial stability. Recommendations 92. The meeting recommended the following: i) ii) The CMI should conduct hands on training on econometric modelling for financial stability, that is applicable to COMESA Member countries including macro stress testing with hypothetical data; CMI should explore the possibility of obtaining actual data to be used for macroeconomic stress test exercises from member countries who are willing to avail such data; and Developments and Trends in Stress Testing 93. The meeting was informed on the following salient points of of developments in Micro and Macro stress testing with emphasis on recent developments that have a bearing on macroprudential policy formulation and analysis: 94. Micro stress testing supplements other risk management tools. It provides forward looking assessments of risks, facilitates development of mitigation plans. Macro stress testing on the other hand is designed to stress the financial system as a whole or sub-sets thereof, rather than micro stress testing that is designed to stress individual institutions. 95. Given the current technology macro stress tests are still ill-suited as early warning devices (tools for identifying vulnerabilities during tranquil times and for triggering remedial action). 96. In spite of these short comings macro stress tests are quite effective as tools for crisis management and resolution. Macro stress tests can discipline our thinking about financial stability risks, they help to reconcile different perspectives of different stakeholders, foster better communication, help cross check performance of individual firms’ risk models and identify important data gaps. 97. Macro stress tests will increasingly become the core element of macroprudential frameworks. It is important to understand what stress tests can and cannot do. Expectations should not be set unrealistically high. Stress tests as currently set up have limited reliability for CS/CMI/FSDSS/7/5 Page 20 identifying vulnerabilities in tranquil times. They can help to improve the dialogue about financial stability vulnerabilities, but must be properly interpreted. Macro stress testing in COMESA. countries still has a long way to go given the data and methodological gaps that exist. There are several directions for improvement. Recommendation 98. The meeting recommended the following: Central Banks should develop capacity to conduct macroprudential analysis and macro stress testing on a regular basis. This may require expanding the scope of data collection to include real estate prices, and balance sheets of corporate and household sectors. Forward Looking Financial Stability Reports: Design, Developments and the Way Forward 98. . The meeting was informed that a a number of developments that had occurred world wide with regard to financial stability reports in terms of clarity, coverage of key risks and consistency overtime were examined. It was also noted that a number of reports in the COMESA region lack the “forward-lookingness” aspect and provided mechanisms through which the reports could be made to provide sufficient analysis of the risks and vulnerabilities in our financial sectors so that they become important vehicles for systemic risk assessment. The following were highlighted as the most important elements of the report; The reports should include forward looking statements about risks and vulnerabilities, its tools should include stress testing and other forward looking techniques. The report should clarify the objective for its publication. At the very least the objective should be identifying and analysing risks to the financial system. A forward looking FSR has an Improved coverage of key systemic risks. The reports should consistently cover the key systemic risk factors, the discussions should be based on the projected trends of financial indicators and results of sensitivity or scenario stress testing, the coverage of risks should be comprehensive to include detailed analysis of risks specific to the domestic financial system. The FSR should employ more forward looking analysis through the provision of forward looking views, assessments or projections consistently and comprehensively. The quantitative content of the reports should be improved. FSRs should report forward looking stress testing results on a regular basis, if possible provide granularity on systemic institutions. The underlying assumptions should be provided, a description of the methodology for the stress tests should be provided. More discussion of macroprudential policies is required. FSRs should focus on macroprudential measures, with a discussion of policy measures closely tied to the risks and vulnerabilities. Policy actions should arise from a risk assessment of the financial system for the outcomes to impact the behaviour of agents. The reports should raise any concerns regarding data gaps. This is in regard to data availability or, completeness in analysis. The region should move towards standardization of FSR Publication. This is in respect to: dates of release, period of coverage and, regularity of the reports. At the minimum a Forward Looking FSR should have the following suggested outline: CS/CMI/FSDSS/7/5 Page 21 – Chapter 1 – Overview and Executive Summary, a two-to-three page summary focused on briefly identifying the main threats to systemic stability and measures to prevent them or mitigate the consequences; – Chapter 2 – Economic and financial conditions, vulnerabilities to the outlook; – Chapter 3 - Main Risk scenarios (e.g stability implications of external demand shocks or liquidity problems on the banking system): Future Prospects, Risks and Stress Tests ); – Chapter 4 - Conclusions and policy recommendations for preventing systemic problems or dealing with them if prevention fails. May also review developments in macroprudential policy since the last report. – Appendix I – Special Topics (optional). – Appendix II- Statistical Tables, FSIs and Consolidated balance sheet of the banking sector. Recommendation 99. Central banks are required to continue with capacity building and knowledge sharing initiatives to facilitate the production of forward looking financial stability reports Building a Framework for Assessing Systemic Risk 100. The meeting noted the following highlights of the presentation under this agenda item: There have been a number of developments in the assessment of systemic risk. In this presentation the following simple framework that is relevant for COMESA countries in conducting three important aspects of risk assessment was discussed. First, identification of the critical parts of the financial system that are most likely to generate concerns about systemic stability. Second, determination the main interconnections within the financial system and between the financial system and the real economy. Finally, identification of the data that will be needed in times of crisis. 101. Before a crisis actually hits, preparatory work revolves around the following activities: Defining critical elements of the financial system, mapping interconnections, identifying information needs and, defining scaling criteria. Performing systemic risk assessment in the context of an actual crisis requires a thorough understanding of the critical parts of their financial system and the main contagion channels. More specifically the following are required to build a framework for assessing systemic risk: The successful implementation of the systemic risk assessment framework in the context of an actual crisis within COMESA countries requires cooperation of the authorities involved in supervision and financial stability (Central Banks, Ministries of Finance, Deposit Insurance, Insurance and Capital markets regulators). COMESA countries should assign the responsibility for conducting the assessment to specific staff, such as Financial Stability Departments. Member states should identify information needs in times of crises. Procedures need to be put in place to ensure that the information that is most likely to be needed is either readily available in so-called fact books or can be made available at short CS/CMI/FSDSS/7/5 Page 22 notice. Those responsible for conducting the assessment also should have adequate access to Information. Financial crises are by nature multidisciplinary phenomena and transcend the boundaries of individual Departments. Different disciplines will need to work together in crisis situations. Strong support at the executive level is required. Possible ways to achieve these objectives include: applying the framework to previous crises (“back testing”) or tailoring a crisis simulation exercise (either domestically or internationally) around the conduct of a systemic risk assessment. Countries that have a high share of foreign ownership in their financial sectors or have financial sectors with significant overseas operations may want to reach out to foreign supervisors. Cross-border crisis management arrangements may also be periodically tested in crisis simulation exercises. In addition to establishing formal MOUs, engaging in regular informal contact with the home supervisor helps create a basis of trust needed for a proactive exchange of information. The framework requires regular maintenance. Authorities need to be willing to invest in keeping the short list of critical parts of the financial system. The contagion matrix framework up-to-date should be done by reviewing it at least once a year. The framework has considerable implications for staffing and resources for COMESA countries that would like to implement it. This requires a strong commitment on behalf of the implementing country. Recommendation 102. Central Banks should build human skills on a sustainable basis for gauging and determining granular overall ratings of systemic risk or financial stability in accordance with the COMESA framework for financial stability assessment. Group Exercises on Preparation of Forward looking Financial stability reports 103. The meeting noted the following activities that were undertaken under this agenda item: To provide hands on training on the preparation of Forward Looking Financial Stability Reports a case study based on an imaginary country called AZALAND was employed. 104. To undertake this exercise the delegates were divided into three groups and addressed the following questions: a) What are the main threats to financial stability in Azaland? CS/CMI/FSDSS/7/5 Page 23 b) Which macroprudential (economic and financial) indicators should the central bank of Azaland consider for its financial stability assessment? c) How to assess the overall design of the stress testing framework of the central bank of Azaland? d) Is the stress test framework of the Central Bank of Azaland comprehensive enough to capture the major risks of the banking sector e) How to assess the stress test results under the baseline and adverse scenario for the banking system in Azaland? 105. After addressing the above questions, the groups proposed outline of a Forward Looking Financial Stability Reports for the Central Bank of Azaland. They indicated the risks that they emphasise in the stress tests,; what might be the transmission channels; and what they would propose to deal with these risks. 106. In the discussion after the presentation by the groups, delegates proposed the following: Requested for more practical case studies in future meetings; Use of dedicated resource persons for each group; The provision of model solutions to the practical group work; The use of simple tools; and The setting aside of more time to practical work. CS/CMI/FSDSS/7/5 Page 24 Meeting recommendations for the 2013 Work Plan of the COMESA Financial System Development and Stability Sub-Committee 107. The meeting recommended the following work programme for the Sub-Committee for the year 2013 : No. Task 1 2 3 4. Activity Responsibilit y Completion Date Financial Establish Financial Stability Stability Unit Unit Member Countries Sept. 2013 Financial Stability Committee Establish a multi-disciplinary Financial Stability Committee Member Countries Sept 2013 Strategic Plan Develop in-country Strategic Implementation Plan covering institutional structures and chosen methodologies and/or modalities for: Information gathering; Data analysis; Interpretation of the results; Policy recommendations; and Policy implementation. Member Countries June 2013 Macroprude ntial policies Develop sound macroprudential policies Member countries Sept 2013 CS/CMI/FSDSS/7/5 Page 25 5. Action Plan Develop in-country Action Plan for Implementation of COMESA Framework covering: conduct of consultative meetings and/or meetings with other stakeholders; establishment of technical subcommittee where necessary; issuance of customized guidance on on-going surveillance, diagnostic assessment, and policy actions; production of Financial Stability Reports; Review of legislation where necessary; and Roll-out of the Framework. Member Countries Financial Stability Assessment Implement Financial Stability Assessment Framework incorporating: Forward looking financial Stability Report (FSR) Financial Stability Assessment Matrix; GLYOR five-tier coding system; Financial Soundness Indicators (FSIs); Macro-prudential analysis; Stress testing; and SHIELDS Rating System Member Countries Dec. 2013 7 Forward Looking Financial Stability Reports Electronic submission of Financial Stability Assessment Reports to the Secretariat for posting onto the COMESA website CMI/ Member Countries October 2013 8 Financial Soundness Indicators Electronic submission of IMF Financial Soundness Indicators (FSIs) for banking sector to the Secretariat for posting onto the COMESA website CMI/ Member Countries 60 days after end of each quarter with effect from December 2012 6 Sept 2013 CS/CMI/FSDSS/7/5 Page 26 9 10 Operational Manual for the COMESA Assessment Framework on Financial Stability Capacity Building Preparation of the Manual CMI June 2013 Conduct hands on training on the following: i) macrostress testing approaches with hypothetical data; ii)Econometric modeling of financial stability which is relevant for the region. CMI/ Member Countries June 2013 Wrap Up Session 108. During the wrap up session the delegates made the following comments in order to increase the effectiveness of the future meetings; i) Since the economies in the COMESA region are not sophisticated, there is need to concentrate on simple tools that are relevant to the region; ii) Need to ensure full implementation of the COMESA Framework for financial stability and base the overall assessment of financial stability on the Shield Ratings System; iii) Need to concentrate on practical issues to ensure effective implementation ; iv) Need to make available course materials two weeks before the meeting; v) Need for those who are trained in this meeting to share their knowledge with other colleagues in the Financial Stability Unit of their Central Bank. ANY OTHER BUSINESS 109. No issues were raised under this agenda item. ADOPTION OF THE REPORT AND CLOSURE OF THE MEETING 110. In closing the meeting, Mr. Alphonce Ndikubwimana, National Bank of Rwanda thanked all the delegates for their active participation. He also thanked Mr. Gift Chirozva, Dr. Charles Abuka, Staff of Bank of Uganda and Reserve Bank of Zimbabwe for putting a lot of effort in preparing the detailed meeting material and for making presentation. He wished the delegates safe journey back home. 111. .Mr. Alex Mapako of the Resrve Bank of Zimbabwe, on his behalf and on behalf of the of the delegates thanked COMESA Monetary Institute for organising the meeting. He also thanked Mr. Gift Chirozva, Dr. Charles Abuka and all others for their efforts in preparing the valuable training materials and for facilitating the meeting . He further thanked all those involved in servicing the meeting. CS/CMI/FSDSS/7/5 Page 27 LIST OF PARTICIPANTS/LISTE DES PARTICIPANTS BURUNDI Mr. Nganikiye Balthazar, Superviseur Bancaire, Banque de la République du Burundi, B.P. 705, Bujumbura ; Tel: +257 22 204010 / +257 79580542 (Mobile) ; Email: [email protected] / [email protected] Ms. Hatungimana Claire, Responsable-Adjoint du Département de la Supervision Bancaire, Banque de la République du Burundi, B.P. 705, Bujumbura ; Tel: +257 22222265 ; Email: [email protected] Mr. Ndayisenga Paulin, Cadre du Service des Études et Statistiques, Banque de la République du Burundi, B.P. 705, Bujumbura ; Tel: +257 22 204072 ; Fax : +257 22 223128 ; Email: [email protected] / [email protected] Mr. Kaboneke Boniface, Responsable Adjoint du service Marchés Monétaire et Financier ; Banque de la République du Burundi, B.P. 705, Bujumbura ; Tel: +257 22 204029 ; Fax : +257 22 223128 ; Email: [email protected] EGYPT/ÉGYPTE Mr. Mohamed Afify Allam, General Manager, Central Bank of Egypt, 54 Gomhoria St., Cairo; Tel: +207 002 269 712; Email: [email protected] Mr. Ahmed Sahloul, Quantative Risk analyst, Central Bank of Egypt, 54 Gomhoria St., Cairo; Tel: +201118262737; Email: [email protected] ERITREA/ÉRYTHRÉE Mr. Kesete Habte Sebhatu, Senior Supervisor, Bank of Eritrea, PO Box 849, Asmara; Tel: +291 1 120177; Fax: +291 1 123162; Email: [email protected] / [email protected] Mr. Berhane Ghebreslasie, Senior Supervisor, Bank of Eritrea, PO Box 849, Asmara; Tel: +291 1 125218; Fax: +291 1 123162; Email: [email protected] / [email protected] KENYA Mr. Edwin Kipsitet, Assistant Manager, Central Bank of Kenya, P. O. Box 60000 00200 Nairobi, Tel: +254 20 2863025; Email: [email protected] LIBYA/LIBYE Dr. Ezzeddin Ashur, deputy Driector of Research and Statistiscs, Central Bank of Libya, P.O. Box 1103, Tripoli, Tel: +218 21 4776022; Fax: +218 21 4773903; Email: [email protected] MADAGASCAR Mme Rabarisoa Ramangalahy Volatiana Zoely, Directrice CSBF, Banque Centrale de Madagascar, BP 550, Antananarivo 101 ; Tel : +261 340 565 655 ; Email : [email protected] MALAWI CS/CMI/FSDSS/7/5 Page 28 Ms. Angela Mjojo, Principal Economist (Financial Stability), Reserve Bank of Malawi, P.O Box 30063, Lilongwe 3; Tel: +265 1 770600; Fax: +265 1 770593; Email: [email protected] MAURITUS/MAURICE Mr. Karankumar Pitteea, Analyst – Economic Analysis Division, Bank of Mauritius, Sir William Newton Street, Port Louis, Tel: +230 206 5619; Fax: +230 211 1355; Email: [email protected] RWANDA Mr. Ndikubwimana Alphonse, Manager, Financial Stability Analysis, National Bank of Rwanda, P.O Box 531, Kigali, Tel: +250 788 308 963; Email: [email protected] SEYCHELLES Mr. James Bernard Jean, Financial Services Analyst, Central Bank of Seychelles; Tel: +248 428 2080; Fax: +248 432 3665; Email: [email protected] SUDAN/SOUDAN Mr. Adil Fadlalla Elsheikh, Head of Financial Institutions Section, Central Bank of Sudan, PO Box 313, Khartoum; Tel: +249 912 104 702; Email: [email protected] Ms. Mashair Mohammed Ibrahim Sabir, Central Bank of Sudan, P.O. Box 313, Khartoum, Tel: +249 187 056 564; Email: [email protected] Mr. Abdelaziz Mohamed Abdelrhman, Supervisor, Central Bank of Sudan, P.O. Box 313, Khartoum, Tel: +247 187 056 556; Fax: +247 183 771 482; Email: [email protected] SWAZILAND Ms. Rejoice Dlamini, Senior Economist, Central Bank of Swaziland, P.O. Box 546, Mbabane, Tel: +268 2408 2338; Fax: +268 240038, Email: [email protected] Mr. Wellington Motsa, Manager, Bank supervision (Off-site Monitoring) Central Bank of Swaziland, P.O. Box 546, Mbabane H100, Tel: +268 2408 2159; Fax: +268 2404 7219, Email: [email protected] UGANDA/OUGANDA Ms. Justine Bagyenda, Executive Director, Supervision, Bank of Uganda, Tel: +256 414 230051, Fax: +256 414 258515, Email:[email protected] Ms. Pamela Kahwa, Senior Banking Officer, Micro Stress Testing, Bank of Uganda, PO Box 7120, Kampala; Tel: +256 783 147 972; Email: [email protected] Mr. Peter Mugisa, Head of Financial Surveillance Section, Bank of Uganda, P.O. Box 7120, Kampala, Tel: +256 701 540 060; Email: [email protected] CS/CMI/FSDSS/7/5 Page 29 ZIMBABWE Mr. Tinashe C. Bvirindi, Senior Bank Examiner, Reserve Bank of Zimbabwe (RBZ), 80 Samora Machel Avenue, Harare; Tel: +263 4 703000; Email: [email protected] / [email protected] Mr. Alex Mapako, Senior Bank Examiner, Reserve Bank of Zimbabwe (RBZ), 80 Samora Machel Avenue, Harare; Tel: +263 4 703000; Email: [email protected] / [email protected] CONSULTANTS Mr. Gift Chirozva, Chief Bank Examiner, Reserve Bank of Zimbabwe (RBZ), 80 Samora Machel Avenue, Harare; Tel: +263 4 703 000; Fax: +263 4 705 928; Email: [email protected] Dr. Charles Augustine Abuka, Director Financial Stability, Bank of Uganda, Plat 45 Kampala Rd, PO Box 7120, Kampala; Tel: +256 752 344 078; Fax: +256 414 258 063; Email: [email protected] COMESA MONETARY INSTITUTE/INSTITUT MONÉTAIRE DU COMESA Mr. Ibrahim Zeidy, Director, COMESA Monetary Institute, Nairobi; Tel: +254 787 408269 ; email: [email protected]/ [email protected] Mr. Zorodzo Chuma, Economist, COMESA Monetary Institute, Nairobi; Tel: +254 715 777 441; Email: [email protected] Mrs. Monica Cherwon, Administrative Assistant , c/o Central Bank of Kenya, P. O. Box 60000 00200 Nairobi, Kenya ,Tel: +254 8646207/190, Email: [email protected] COMESA SECRETARIAT Ms. Mary M. Ndoti, Senior Secretary, COMESA Secretariat, P.O. Box 30051, Lusaka, Tel: +260 211 229725 – 31 Fax: +260 211 225107; email: [email protected] Ms. Catherine Mwaba, Senior Bilingual Secretary, COMESA Secretariat, P.O. Box 30051, Lusaka, Tel: +260 211 229725 – 31 Fax: +260 211 225107; email: [email protected] INTEPRETERS/INTERPRÈTES Mr. C.K. Sokpor-Dufe, Conference Interpreter, Lingua-Verbus Conference Consultants, PO Box 2581-00200, Nairobi; Tel: +254 722 707 165; Email: [email protected] Mr. Benoit Mugenzi, Interpreter, Interlingua, PO Box 61544-00-200; Tel: +254 728 596 407; Email: [email protected] Mr. Butarama Martin, PO Box 61544 00200 Nairobi; Tel: +254 715 961 447; Email: martin. [email protected] TRANSLATOR/TRADUCTEURS Ms. Christiane Adotevi-McWest, Translator, PO Box 66446-00800, Nairobi; Tel: +254 733 869 350; Email: [email protected] Mr. Koku Mawena Kudo, [email protected] Translator, Nairobi; Tel: +254 734 902 422; Email: CS/CMI/FSDSS/7/5 Page 30