To address the high demand for training on banking supervision and on the conduct of monetary policy, the JVI, in cooperation with the Deutsche Bundesbank (BBk) and the Oesterreichische Nationalbank (OeNB), offered two new courses early in 2016.
Banking Supervision within the Basel Framework
The first course, held February 29-March 4, was devoted to banking supervision issues related to Basel II and III, with the BBk, the JVI, the OeNB, the Bank for International Settlements (BIS), and the Czech National Bank (CNB) providing speakers. After introductory lectures on micro- and macroprudential supervision in the EU and Germany and on risk-based supervision in Austria, the course explored the Basel III framework in detail and discussed how micro- and macroprudential policies interact. Practitioners from the Munich branch of the BBk spoke on specific supervisory issues, such as the Internal Capital Adequacy Assessment Process (ICAAP) and on-site inspections, as well as on specific risks, such as credit, liquidity, and IT risk. The course ended with a panel on stress testing, in which speakers from the OeNB and the CNB described how they do stress testing and how they use it in supervision.
The course also featured a fascinating workshop on Basel III designed by the BIS. Participants were given the balance sheet of a bank that did not meet Basel III requirements for capital adequacy, liquidity coverage, net stable funding, and leverage; their task was to restructure the balance sheet to make it Basel III–compliant while also attaining the profitability bank shareholders required.
To support peer learning, the course included two sessions in which participants from Croatia, Estonia, Moldova and Poland presented their countries’ experiences with micro- and macroprudential supervision. By focusing on concrete issues, such as how to validate internal risk models used by banks or how to best standardize bank reporting to support off-site supervision, these presentations attracted a lot of attention.
Monetary Policy Implementation
The second course, which took place during March 7‑11 with lecturers from the BBk, the OeNB, and the JVI, focused on the implementation of monetary policy, a topic of great importance to central bank staff and even more so after the global financial crisis. The goal was to improve participants’ understanding of the tools through which central banks steer monetary and financial conditions, and how these relate to the broader policy regime, with the ECB’s operational framework serving as an example. The range of issues covered, from technical aspects related to the design of central bank auctions and standing facilities (and the choice of collateral), to the role of central bank communication and policy transparency, attests to the richness and complexity of the topic.
In addition to lectures, the course featured several interactive workshops. In order to illustrate the role of auction design for the provisioning of liquidity in the money market, one workshop, for example, had participants act as banks bidding for reserves under various auction schemes, with the counselor serving as the central bank. Another workshop had participants build transparency indices for various central banks, including their own, which then helped them identify areas for improvement.
This course also included country presentations by participants, which served to highlight both the challenges of recent years for the conduct of monetary policy and the unconventional responses to these challenges, such as the use of the exchange rate as a policy instrument in the Czech Republic.
Both courses will be repeated early in 2017. To apply, check the JVI’s 2017 course schedule, expected to be online this September.
Adam Gersl, Senior Economist, JVI
Rafael Portillo, Senior Economist, JVI