MEFMI > AboutMEFMI > Current News > MEFMI/FSI raise awareness on prudential issues arising from the COVID-19 pandemic

MEFMI/FSI raise awareness on prudential issues arising from the COVID-19 pandemic

  • November 28, 2020
  • Posted by: admin
  • Category: Current News
No Comments

The COVID-19 pandemic has worsened the vulnerability of the financial sector and presents unprecedented challenges for bank supervisors in the MEFMI region and the rest of the world. The measures put in place to curb the spread of the disease are having serious effects on the real and financial sectors, which threaten the stability of the global financial system. In addition, there is a risk that the rise of non-performing loans may trigger widespread distress among financial institutions. These developments require effective supervision to preserve financial stability.

In view of this, MEFMI and Financial Stability Institute (FSI) of the Bank of International Settlements (BIS) jointly delivered a virtual seminar on prudential issues arising from the effects of the COVID-19 pandemic. The seminar was delivered through two (2) webinars held on 28 October and 2 November 2020 titled “Evaluating the Covid-19 impact and preparing the post-crisis phase” and “Prudential Regulation and Supervision measures to absorb the shock” respectively. The seminar began with a discussion of the pressures that the COVID-19 pandemic shock placed on the banking system in comparison to past episodes of banking distress.

Participants learnt about the prudential treatment of extraordinary support measures, credit loss accounting and utilisation of the Basel III capital and liquidity buffers. Examples of the measures implemented by supervisors in the region were also discussed. The discussions demonstrated that interventions which target to improve liquidity in the banking system through central bank lending and asset purchases have historically provided the best results. Participants are expected to use the knowledge from the seminar to develop and implement tailored measures to protect the financial systems in their respective jurisdictions from the COVID-19 pandemic shock.

The seminar was attended by 53 participants from 13 MEFMI member countries. The participants were guided by the resource team comprised of Frederic Boissay (Bank for International Settlements – BIS), Marc Farag (BIS), Courtney Christie-Veitch (IMF East AFRITAC), and Leonard Chumo (Bank Supervision expert). The sessions were moderated by Vasily Pozdyshev (BIS/FSI) and Patrick Mutimba (MEFMI).

Prepared by Noel Mahombera