- December 8, 2023
- Posted by: admin
- Categories: Financial Sector Management, Financial Sector Management
MEFMI conducted a workshop on Stress Testing for the Bank of Tanzania (BoT) from 13 to 17 November 2023. The training was held at the Bank of Tanzania, Zanzibar Sub Head Office in Zanzibar and aimed to enhance the participants’ knowledge and capacity to conduct stress tests using Excel-based stress testing tools.
In the MEFMI region, the use of stress testing exercises by banks and bank supervisors has become widespread and is an important part of the supervisory frameworks in most member countries. In its bid to promote the adoption of stress testing in Tanzania, the Bank of Tanzania (BoT) issued Stress Testing Guidelines for Banks and Financial Institutions in 2022. The BoT has since embarked on a programme to build its capacity to conduct stress testing as part of its supervisory activities.
Stress testing is a forward-looking exercise whose objective is to assess the impact of severe but plausible adverse scenarios on individual financial institutions (mostly banks and insurance firms) or the whole or parts of the financial system. While stress tests are used by financial institutions for risk management purposes, supervisory authorities use stress tests to evaluate the prospective resilience of supervised entities to specified risks. As such, the results of stress testing exercises help supervisors identify the vulnerabilities of the financial sector and find ways to improve its resilience.
A total of 52 officials attended the training which was facilitated by two regional experts, Ms Pamela Kahwa and Mr Clemence Chimwanda. MEFMI expects the training to enhance BoT’s capacity to effectively exercise oversight of the banking sector. This will ultimately lead to a more resilient and stable financial sector in Tanzania.