To strengthen the financial institutions to enhance stability in the banking system, the Central Banks of Anglophone West African countries namely, Nigeria, Ghana, Liberia, Gambia, Sierra Leone and Guinea, are mapping out new strategies to focus on risk banking supervision, modern techniques needed to tackle the changing structure of banking system and prudent behaviour by financial intermediaries to prevent system collapse now and in the long-run.
To achieve these objectives, The College of Supervisors of African Monetary Zone (WAMZ), in collaboration with West African Institute for Financial and Economic Management, organised a regional course on ‘Banking supervision: Intermediate level’ for Central Banks within the zone. Some experts spoke with Sunday Vanguard on the imperative for modern supervisory techniques and the impact of the on-going banking reforms in the sub-region.
Risk management vital to prevent system-Mr. Belal Kanneh, Central Bank of Liberia : West African sub-region needs experts in risk banking supervision. The banking industry is very crucial to economic growth and
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Belal Kanneh[/caption]development of every country.
It is imperative for banks in the sub-region to focus on risk management in order to build on the on-going banking reforms to prevent system collapse now and in the long-run. This requires taking due advantage of the extensive capacity building programmes for regulators and supervisors within the sub-region to keep on track with international best practice. F
or example, the on-going reform in the banking industry in Nigeria has strategically repositioned the sector for greater growth.
This will enable the regulators to effectively tackle new challenges posed by globalisation in the financial system.
This implies that regulators and supervisors must undergo regular capacity building programmes to understand the modern techniques needed to enhance effective monetary policy management to strengthen the economies in the sub-region.
For instance, the regional course put together by the Institute covers an overview of banking supervision, risk management, consolidated supervision, corporate governance principles, corrective action framework and bank licensing process among other topics relevant to risk-focused supervision, which are relevant to risk management in the financial system.
Modern techniques of supervision, bank licensing and preventive measures are required to avoid bank failures- Director General, West African Institute for Financial and Economic Management, Prof. Akpan Ekpo:
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Prof. Akpan Ekpo[/caption]Regulators must have in-depth knowledge, modern techniques of supervision, bank licensing and preventive measures required to avoid bank failures. Over the last decade, the financial markets have become more open and the use of administrative controls to restrict the activities of financial intermediaries is no longer in vogue.
Nowadays, national capital markets are not insulated from capital flows, and government intervention to counteract undesired capital market developments is no longer fashionable.
Also, given the rapid technological advances, there is need to strengthen the internal discipline of capital markets to ensure stability of the financial system.
It is imperative for regulators, supervisors of the financial system and those concerned with systemic stability to promote prudent behaviour by financial intermediaries. I want to focus on the changing structure of the banking system and risk focused banking supervision.
In recent years, international banking scene has witnessed strong trends toward globalisation and consolidation of the financial system. The stability of the system has become a major challenge to bank regulators and supervisors throughout the world.
The multilateral initiative leading to evolution of international supervisory standards and codes, as well as evaluation of adherence thereto, represent resolute attempts to address this challenge.
In the sub-region, supervisory process has concomitantly evolved and it aims at attaining a certain level of robustness and sophistication consistent with international best practice. However, globalisation and liberalisation have added other dimensions to the challenges of regulation and supervision of the banking system.
A relatively new tool to deal effectively with the new challenges is risk-focused banking supervision. Risk-focused allows for optimising the synergy from different activities, such as regulatory and supervisory functions to enhance the overall efficiency in the system.
It entails the development and maintenance of a dynamic supervisory plan that responds to the organisation’s changing risk profile. Successful implementation or risk-focused supervision requires existence of efficient risk management architecture, adoption of risk-focused internal audit, a strengthened management information system and trained personnel in risk management and risk-based audit.
Financial system regulators must embrace constant training programmes to meet international standard- Mrs. T. Jatta, Central Bank of Gambia :
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T. Jatta[/caption]This is very quite imperative because capacity building programmes are designed to adequately equip regulators in the sub-region for the task ahead.
To ensure effective transfer of skills, the Institute has established collaborative technical partnership with global institutions known in capacity building for economic and financial management. The financial system in the sub-region can achieve rapid development if the supervisors and regulators take full advantage of these capacity building programmes.
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