FINANCIAL STABILITY NEW CHALLENGES FOR CENTRAL BANKS BANK
FINANCIAL STABILITY- NEW CHALLENGES FOR CENTRAL BANKS BANK OF TANZANIA EXPERIENCE Presented at the AACB 2016 Continental Seminar Cairo-Egypt, May 9, 2016 Bank of Tanzania
2 Scope 1. Introduction; 2. Challenges of Financial System Stability oversight and policy at: • • • Central Bank Level National level Regional level 3. The Way Forward.
3 Introduction Ø Increasing inter-linkages between financial institutions, markets and markets infrastructure at national, regional and global levels has heightened risks transmission channels. • This was reflected in 2007/08 Global Financial Crisis. Ø The Crisis highlighted the need for coordination of Financial Stability oversight and policy at national and regional levels.
4 Bank of Tanzania • Bank of Tanzania takes the lead in promoting financial stability. • A dedicated Financial Stability Directorate to undertake macro- prudential analysis, recommend macro-prudential policy actions in order to mitigate potential threats in the financial system and coordinate financial crisis preparedness, management and resolution. • Financial Stability Reports are produced twice a year to inform stakeholders of the financial system, on the potential vulnerabilities and mitigation policy measures.
5 Challenges • Limited data: • to monitor vulnerabilities that exist on household balance sheet and real estate sector. • Limited capabilities in monitoring systemic risks arising from: • Usage of mobile platforms (banking sector and markets), • Liberalization of capital account. • Incomplete banking crisis management framework: • Lack of ELA arrangements; • Lack of resolution funding framework; • Communication strategy.
6 National Level The role of coordinating financial stability oversight, crisis management & resolution at national level is conducted through Tanzania Financial Stability Forum, chaired by the Governor - Bank of Tanzania. • The Forum mandate is derived from an MOU. • Members of the Forum: Bo. T, Ministries of Finance, Deposit Insurance Board & regulators for Insurance, Social Security & Capital Markets. Challenges: • • Whether to replace the MOU with legislation in order to enhance enforcement of the Forum decisions. Lack of national crisis management framework.
7 Regional Level • Expansion of Pan-African Banking Groups raises new regulatory challenges: • Cross-border Prudential Banking Supervision; • Macro-prudential Oversight; • Cross-border Financial Crisis Management & Resolution. • Cross-border Prudential Banking Supervision • Lack of regulatory oversight of bank holding companies in some jurisdictions; • Limited cooperation in cross-border supervision. • Macro-prudential Oversight • Lack of Regional cooperation on macro-prudential oversight. • Cross-border Financial Crisis Management & Resolution. • Lack of regional arrangements for cooperation in cross-border crisis management & resolution.
8 The Way Forward • Continue to develop and improve existing early warning systems: • Conduct min HBS annually in collaboration with NBS; • Develop surveillance tools for real estate sector; • Strengthening institutional capacity for development and implementation of macro-prudential policy: • Whether to replace the MOU with legislation in order to enhance enforcement of the Forum decisions--Review BOT ACT; • Enhance coordination of risk management and crisis resolution at national and regional arrangements.
9 Thank You!
- Slides: 9