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- October 21 - November 1, 2013
Joint International Monetary Fund/World Bank/Federal Reserve System--Seminar for Senior Bank Supervisors from Emerging EconomiesFederal Reserve System Courses
Type of Participant Targeted
This seminar is designed for senior bank supervisors from emerging economies. These supervisors generally are directors of bank supervision, deputy heads of supervision, or high-level staff involved in, or capable of influencing, policy formulation as it concerns the supervision and regulation of banks in their respective countries.
In its work in emerging economies, the experiences of the World Bank and the IMF suggest that macroeconomic reforms will be ineffective or counterproductive when a country’s financial system is in distress. This occurs because a significant part of the resources that are mobilized by the banking system is used to carry problem borrowers rather than used for loans to productive users of credit. Unless contained by strong prudential regulation and effective accounting policies, the bad portfolio grows until insolvency leads to illiquidity, and the central bank must intervene as lender of last resort. In such cases, the collapse of several smaller banks or of a large bank may cause the sudden contraction of the money supply, the failure of the payment system, and severe dislocations in the real economy. Such a collapse may also create real or implicit obligations on the part of the government, as guarantor of depositors and the lender of last resort. The failure of any bank, no matter how small, may lead to contagion and loss of confidence in the system unless the government can demonstrate its ability to handle bank failures in an orderly and systematic fashion. For these reasons, strong and effective bank supervision and prudential regulation is considered critical if the financial health of an emerging country's banking system is to be restored and/or maintained.
The objectives of the seminar are
- To familiarize participants with the supervisory problems faced by emerging economies and the constraints such problems pose to economic growth and development
- To discuss alternative solutions for dealing with banking insolvency and financial system distress through deposit insurance schemes and bank restructuring
- To upgrade the technical skills of bank supervisors
At the conclusion of this seminar, participants will, at a minimum, be able to
- Improve supervision and examination capabilities
- Understand the implications of a financial crisis and the alternatives for restructuring banks
- Gain a better understanding of regulations affecting banking institutions and achieve a greater awareness of major regulatory and supervisory topics being discussed at the international level
Strong and effective bank supervision and prudential regulation are cornerstones of a healthy financial system. Since the 1980s, nearly every financial sector adjustment operation undertaken by the World Bank and the IMF has included a component for strengthening bank supervision and prudential regulation. Traditionally, in most countries, highly specialized bank supervision and examination skills have been learned on the job, with only the largest, most developed countries having the resources to establish training departments and courses. Training, to the extent that it has been conducted in emerging economies, has been narrow in focus.
This seminar will attempt to overcome some of these shortcomings by bringing together a group of participants from a wide variety of countries. The program will focus on discussions of the principal policy issues facing bank supervisors in developing countries today. It will establish the linkages between financial system health and macroeconomic performance and the World Bank’s general framework for financial sector reform. From these broader issues, the seminar will move to discussions concerning the causes of financial system distress and possible solutions, including problem bank resolution and bank restructuring.
World Bank and IMF staff, and a distinguished group of experts from the U.S. bank supervisory agencies, major international accounting firms, and elsewhere, will lead the discussions. Class participation and interaction will be encouraged.
The seminar will also focus on skills development. Speakers from the Federal Reserve System, the World Bank, the IMF, the Bank for International Settlements, the Toronto Centre, and the Financial Stability Institute, among others, will discuss many aspects of supervisory and regulatory best practices, including implementation road maps and challenges. Other topics may include loan portfolio management, credit risk, classification of assets, bank analysis, foreign exchange risk, market risk, interest-rate risk, the CAMELS rating system, risk-focused examination techniques, and internal and external auditing. The topics will be presented using a combination of lectures, class discussions, case studies, group exercises, and class presentations. Once again, class participation and interaction will be encouraged as an effective means of sharing ideas and learning. This seminar will continue the process of providing technical assistance to emerging economies.