Disponible en Español

XI Meeting of Heads of Financial Stability

September 7 - 9, 2021
Digital Format

 

The XI edition of the meeting was held on a digital format on September 7-9, 2021. It was a joint effort by the Center for Latin American Monetary Studies (CEMLA), Banco de España and Banco Central de Chile. It was attended by 130 representatives from 37 institutions and associates of CEMLA from Argentina, the Bahamas, Belize, Bolivia, Brazil, Canada, Chile, Colombia, Costa Rica, Dominican Republic, Ecuador, El Salvador, Guatemala, Guyana, Honduras, Jamaica, Mexico, Nicaragua, Panama, Peru, the Philippines, Portugal, Sint Maarten, Spain, Switzerland, Suriname, Trinidad and Tobago, United States and Uruguay. The meeting was focused on the repercussions and macroprudential policies towards COVID-19, the relationship between digitalization of finance and financial stability, and the implications of climate change for financial stability.

 

Session 1. Keynote: Public Debt Before and After Covid

This session was devoted to the debt structure of different economies and its changes. Some takeaways from the keynote were:

  • · Borrowing more in domestic currencies increases the dependency on international financial conditions (original sin redux).
  • · The Covid-19 crisis has critically reduced fiscal space in some countries.
  • · The international financial architecture and theoretical frameworks may not address the necessities and conditions of emerging economies.

 

Panel discussion 1. COVID-19 and financial stability

This panel was devoted to experiences in central banks during the COVID-19 crisis. The jurisdictions presented the local and regional conditions, as well as a description of the measures taken by their corresponding institutions and the reception by their financial systems.

  • · Overall, the financial system has been resilient with adequate capital and liquidity levels.
  • · In most countries, credit supply, supported by credit guaranteed schemes, was maintained during the downturn.
  • · The combined action of authorities and regulators help dampen the effects of the crisis, and are in process of revision or ending in some jurisdictions.

 

Session 2. Keynote: The COVID Shock and an Uneven Global Economy

This session was devoted to the impact of the pandemic on firm failures in the U.S. and the effectiveness of government interventions in 2020 and 2021, as well as the effects of fiscal policy on aggregate activity and its global spillovers. The relevant takeaways were the following:

  • · Global imbalances have to be monitored as economies recover at different speed.
  • · While immense U.S. fiscal measures supported effectively the domestic economy, international spillovers on emerging markets might be small or even negative.
  • · It is important to tackle the effects of the pandemic with a multilateral approach.

 

Panel discussion 2. Macroprudential policy during the COVID crisis

This panel presented analyses and commentaries on macroprudential tools applied during the COVID crisis in different jurisdictions, such as capital buffers and public credit guarantees. Their design is key to foster the right incentives for a timely and targeted application, along with the coordination by different regulators. Some takeaways of the panel were the following:

  • · The role of supervision of adequate levels of capital, liquidity and profitability prior exogenous shocks is key in the resilience of the financial system.
  • · There was reluctance to use capital buffers during the crisis due to capacity, supervisory or market limitations in some jurisdictions.

 

Panel discussion 3. Digitalization of finance and financial stability

This panel discussed the implementation of digital solutions and its possible repercussions to financial stability, mainly focused on digital currencies and FinTech. Digital currencies appear in the horizon as the next step in the evolution of money. FinTechs provide financial services with technology-enabled innovation. Some takeaways of the panel were the following:

  • · It is important for central authorities to consider the improvements and potential issues that these technologies could entail, as well as the necessary conditions for their operation, to guarantee a stable and efficient financial system.
  • · Some desirable traits of these new technologies are convenience, the expansion of financial inclusion, and programmability.
  • · Some cautionary aspects to be considered are interoperability, privacy, the threat of possible digital runs, among other.

 

Panel discussion 4. Implications of climate change for financial stability

This panel discussed different approaches to climate change and its implications to financial stability, including both regulatory implementations as well as methodological frameworks for the assessment of its impact. Some key aspects considered in the discussion were the following:

  • · Climate-related and environmental risks will become more relevant as a risk driver for the financial system.
  • · It is important for risk managers to understand the channels by which those risks are propagated, as well as the interactions with other risk drivers, such as market, credit, operational risks, etc.

 

Tuesday, September 7

Opening remarks
  • · Dr. Manuel Ramos Francia, Director General, CEMLA
  • · Ángel Estrada García, Director General Financial Stability, Regulation, and Resolution, Banco de España.
  • · Solange Berstein Jáuregui, Manager Financial Policy Division, Banco Central de Chile

 

Session 1. Keynote: Sovereign debt before and after Covid

Chair: Serafín Martínez Jaramillo, CEMLA

 

Ugo Panizza
Professor of Economics and Pictet Chair in Finance and Development, Graduate Institute of International and Development Studies Geneva

Panel discussion 1. COVID-19 and financial stability

This session discusses the impact of the Covid-19 crisis on national economic and financial development. Diverse financial and fiscal policies were implemented to mitigate negative repercussions on the real economy and financial stability risks, which were accompanied by monetary easing. The session focuses on discussing the eminent risks to financial stability in the light of varying outlooks on economic recovery and new sources of uncertainty. The session sheds light on the significance of rising inflation and the potential impact of monetary tightening abroad and in the home economy for future financial risks. The session draws implications from lessons learnt for the financial policy framework.

 

Chair: Juan Francisco Martínez, Banco Central de Chile

 

  • · Solange Berstein Jáuregui, Manager Financial Policy Division, Banco Central de Chile
  • · Fabrizio López-Gallo Dey, Financial Stability General Director, Banco de México
  • · Daniel Esteban Osorio Rodríguez, Director of the Financial Stability Department, Banco de la República (Colombia).

 

Wednesday, September 8

 

Session 2. Keynote: The COVID Shock and an Uneven Global Economy

Chair: Carola Müller, CEMLA

 

Dr. Şebnem Kalemli-Özcan,
Neil Moskowitz Professor of Economics and Finance, University of Maryland.

Panel discussion 2. Macroprudential policy during the COVID crisis

The Covid-19 crisis came as a shock to financial markets. Countries entered the crisis at different stages of the financial cycle, which had repercussions on the scope to adjust macroprudential measures, such as capital buffers. Diverse accommodating policies and regulatory forbearance were set temporarily in place to support shock absorption through the financial system. This session aims to evaluate the use, effectiveness, and timing of macroprudential tools during the crisis, and to discuss the future outlook for macroprudential policy stances. A key challenge ahead to be discussed in the session is to weigh the benefits of prolonged support of the financial system against its potential negative effects in order to formulate a withdrawal strategy compatible with financial stability goals.

 

Chair: Matias Ossandon Busch, CEMLA

 

  • · Ángel Estrada García, Financial Stability, Regulation, and Resolution, Banco de España
  • · Jorge Ponce, Head of Economic Research, Banco Central del Uruguay
  • · Héctor Augusto Valle Samayoa, Director Financial Stability Analysis Department, Banco de Guatemala

 

Thursday, September 9

 

Panel discussion 3. Digitalization of finance and financial stability

New initiatives of bigtech and fintech companies are populating credit and payment markets. Threats to traditional financial institutions’ profitability and growing disintermediation can imply risks to financial stability. Alternatives to private innovations, such as the public provision of services as in the introduction of a Central Bank Digital Currency (CBDC), have likewise the potential to change classic intermediation. This session focuses on discussing the implications of the digitalization trend for financial stability like the current surge on crypto currencies and crypto assets in general.

 

Chair: Carola Müller, CEMLA

 

  • · Ulrich Bindseil, Director General Market Infrastructure and Payments, European Central Bank
  • · Jon Frost, Senior Economist, Innovation and the Digital Economy Unit, Bank for International Settlements
  • · Pablo Villalobos González, Advisor to the Governor, Banco Central de Costa Rica

Panel discussion 4. Implications of climate change for financial stability

Climate change and biodiversity loss are key challenges for policy makers around the world. Emerging countries are located in those regions that are more exposed to its effects, with Latin America and the Caribbean including some of the most biodiverse areas in the world. Central banks are developing new tools to assess their potential impact on the financial system, for example, by designing climate change stress tests. This session presents regional and international initiatives and approaches that develop environmental policies.

 

Chair: Carmen Broto, Banco de España

 

  • · Patrick Amis, Director General Microprudential Supervision III, Representative at the Network for Greening the Financial System Plenary, European Central Bank
  • · Gilneu Francisco Astolfi Vivan, Head of Financial System Monitoring Department, Banco Central do Brasil.
  • · Serafín Martínez Jaramillo, Advisor, CEMLA, and Senior Financial Researcher, Banco de México

 

Ugo Panizza
Professor of Economics and Pictet Chair in Finance and Development, Graduate Institute of International and Development Studies Geneva

Ugo Panizza is Professor of Economics and Pictet Chair in Finance and Development at the Graduate Institute of International and Development Studies. He is also the Director of the International Center for Monetary and Banking Studies (ICMB), Editor in Chief of International Development Policy, and deputy director of the Center for Finance and Development. He is a Vice President and Fellow of CEPR, and Fellow of the Fondazione Einaudi. Before joining the Graduate Institute, he was Chief of the Debt and Finance Analysis Unit at the United Nations Conference on Trade and Development (UNCTAD) and a Senior Economist at the Inter-American Development Bank. He also worked at the World Bank and taught at the American University of Beirut and the University of Torino.

 

Solange Berstein Jáuregui
Director of the Financial Policy Division, Banco Central de Chile

Ms. Berstein is the Director of the Financial Policy Division of the Central Bank of Chile since April 2017. She studied business administration at the University of Santiago, Chile. She holds a Master of Arts in economics from Ilades/Georgetown University and a PhD in economics from Boston University.

Berstein was a Senior Specialist in the pensions area at the Labor Markets and Social Security Unit of the Inter-American Development Bank (IDB). She served as Chile’s Superintendent of Pension Funds from 2006 to 2014, after previously working as Head of Research at the Superintendence of Pension Funds since 2003 to 2006. From 2001 to 2003, she was a senior economist in the Research Division of the Central Bank of Chile. Her academic activities include teaching courses in the Master of Economics programs at the University of Chile and the Pontifical Catholic University of Chile.

 

Fabrizio López-Gallo Dey
Financial Stability General Director, Banco de México

Fabrizio López-Gallo is the General Director of Financial Stability at Banco de México since September, 2018. He is the Executive Secretariat of the Financial Stability Council He is also a member of the Basel Committee on Banking Supervision (BCBS) and has participated in a broad number of different working groups of the BCBS, the Committee on the Global Financial System and the Financial Stability Board. He has taught at Pompeu Fabra University in Barcelona, Universidad Panamericana and ITAM in Mexico. He has also been a visiting researcher at the Bank for International Settlements (BIS) and consultant for The World Bank. He received a B.A. in Actuary from Instituto Tecnológico Autónomo de México (ITAM), where he also completed a Master in Finance. He obtained his Master and PhD degrees in Economics at Pompeu Fabra University.

 

Daniel Esteban Osorio Rodríguez
Director of Financial Stability Department, Banco de la República (Colombia)

He has been Director of the Department of Financial Stability of the Central Bank of Colombia since August 2017. Since 2015, he has worked on the development of the stress testing model currently in use at the Bank and has worked on research projects on policy monetary, regulation, deepening and financial stability. He has been a professor at the Pontificia Universidad Javeriana, in Bogotá. He is an Economist from the National University of Colombia, a Master in Economics from the University of Los Andes, a Master and Ph.D. in Economics from the London School of Economics and Political Science.

 

Dr. Şebnem Kalemli-Özcan
Neil Moskowitz Professor of Economics and Finance, University of Maryland

Dr. Şebnem Kalemli-Özcan is Neil Moskowitz Endowed Professor of Economics at University of Maryland, College Park. She is a Research Associate at the National Bureau of Economic Research (NBER) and a Research Fellow at the Center for Economic Policy Research (CEPR). Currently, she is the co-editor of Journal of International Economics and serves at the editorial board of American Economic Review. She also serves at the economic advisory panels of the NY Federal Reserve and the Bank of International Settlements. She was the Duisenberg Fellow at the European Central Bank in 2008 and held a position as Lead Economist/Adviser for the Middle East and North Africa Region at the World Bank during 2010-2011. She was the Houblon-Norman Fellow of Bank of England and CFR International Affairs Fellow in International Economics during 2017-2018. She served as the senior policy advisor at the International Monetary Fund during 2019-2020

 

Ángel Estrada García
Director General Financial Stability, Regulation, and Resolution, Banco de España

Mr. Estrada is the director of the General Directorate of Financial Stability, Regulation and Resolution of the Bank of Spain. He has also been director of the Department of Financial Stability and Macroprudential Policy. He was Director General of Macroeconomic Analysis and International Economics at the Ministry of Economy and Finance. He holds a master's degree in monetary and financial economics from the Centro de Estudios Monetarios y Financieros (CEMFI) and a degree in economics from the Universidad Complutense de Madrid.

 

Jorge Ponce
Head of Economic Research, Banco Central del Uruguay

Jorge Ponce has been Head of the Economic Research Department at Banco Central del Uruguay since 2018. Previously, Jorge was Chief of the Financial Stability Department for six years; and has more than 25 years of experience in the financial market. Among his main responsibilities are leading economic research, financial stability analysis and financial innovation at the Bank. Jorge is also Professor of Economics and Finance at Universidad de la República in Uruguay. He holds a Ph.D. in Economics from the Toulouse School of Economics. His academic production has been published in the Journal of Financial Intermediation, the Journal of Financial Stability and the Journal of Banking and Finance, among other scientific publications.

 

Héctor Augusto Valle Samayoa
Director Financial Stability Analysis Department, Banco de Guatemala

Héctor Augusto Valle Samayoa holds a Ph.D. from University of Bristol, England, a Master's degree from University of Colorado at Boulder and a Bachelor's degree from Universidad de San Carlos de Guatemala. He also has postgraduate studies at the Program of Higher Studies in Economics of Central Banking, Banco de Guatemala-CEMLA-Universidad Rafael Landívar. He is currently the Director of the Financial Stability Analysis Department of the Bank of Guatemala and Executive Secretary of the Financial Inclusion Commission. He has been professor of econometrics and macroeconomics courses at Universidad del Valle de Guatemala, Universidad Rafael Landívar and Universidad San Carlos de Guatemala (2000-2019). He was also a researcher at the Economic Research Department of the Bank of Guatemala (2000-2018).

 

Ulrich Bindseil
Director General Market Infrastructure and Payments, European Central Bank

Ulrich Bindseil is Director General Market Infrastructure and Payments at the European Central Bank (ECB), a post he has held since November 2019. Previously, he was Director General Market Operations (from May 2012 to October 2019) and head of the Risk Management Division (between 2005 and 2008). Mr. Bindseil first entered central banking in 1994, when he joined the Economics Department of the Deutsche Bundesbank, having studied economics. His publications include, among others, Monetary Policy Operations and the Financial System, OUP, 2014, and Central Banking before 1800 – A Rehabilitation, OUP, 2019.

 

Jon Frost
Senior Economist, Innovation and the Digital Economy Unit, Bank for International Settlements

Jon Frost is a Senior Economist in Innovation and the Digital Economy at the Bank for International Settlements (BIS). He conducts policy-oriented research on fintech and digital innovation. He has published on fintech, big tech, central bank digital currencies, stablecoins, capital flows, macroprudential policy and economic inequality. Previously, Jon worked at the Financial Stability Board (FSB), the Dutch central bank (DNB), VU University in Amsterdam and in the private sector in Germany. Jon is a US national, from Seattle. He holds a PhD in economics from the University of Groningen, an MA from the University of Munich and a BA/BS from the University of Washington. He is a research affiliate of the Cambridge Centre for Alternative Finance (CCAF) at the University of Cambridge, and a Board member in the FinTech@CSAIL initiative of the Massachusetts Institute of Technology (MIT).

 

Pablo Villalobos González
Advisor to the Governor, Banco Central de Costa Rica

Mr. Pablo Villalobos is currently the Adviser to the president of the Central Bank of Costa Rica, he has been working for more than 30 years in the bank in different areas and with different responsibilities, among others, he was the bank manager. He has a Master's degree in Economics from the University of Costa Rica.

 

Patrick Amis
Director General Microprudential Supervision III, European Central Bank

Patrick Amis is head of the Directorate General Specialised Institutions and LSIs at the European Central Bank, entrusted with the direct supervision of 55 significant banks and the oversight of the less significant institutions within the European Single Supervision Mechanism. He is also in charge of the integration of climate-related risks into the European Central Banks’ supervisory approach. Before his current appointment he joined the ECB in March 2014 as Deputy Director General at the Directorate General Micro-Prudential Supervision I, responsible for the direct supervision of the 30 largest and more complex of the significant institutions in the Eurozone, and then as Director General of LSI oversight.

Before joining the ECB, Patrick Amis had a supervisory career in the Banque de France, which he joined in 1995, where he took a variety of positions in line supervision and prudential policy. He also chaired working groups on accounting, both in the Basel Committee and in the Committee of European Banking Supervisors (CEBS) and was Deputy Secretary General of CEBS from 2008 to 2010.

 

Gilneu Francisco Astolfi Vivan
Head of Financial System Monitoring Department, Banco Central do Brasil

Gilneu Francisco Astolfi Vivan is the Head of Financial System Monitoring Department from Central Bank of Brazil. He represents Brazil in some international Groups about liquidity and supervision. He today he is a member of AGV / FSB-Analytical Group of Vulnerabilities. He is M. A. in Economics and worked at IMF experts in Peru, Costa Rica, Jamaica, Paraguay, and Ecuador. Finally, he published some articles about market risk data collection improvements, Basel rules implementation, and NPL measurement.

 

Serafín Martínez Jaramillo
Advisor CEMLA, and Senior Financial Researcher, Banco de México

Serafin Martinez-Jaramillo is a senior financial researcher at the Financial Stability General Directorate at Banco de México and currently he is an adviser at CEMLA. His research interests include: financial stability, systemic risk, financial networks, bankruptcy prediction, genetic programming, multiplex networks and machine learning. Serafin has published book chapters, encyclopedia entries and papers in several journals like IEEE Transactions on Evolutionary Computation, Journal of Financial Stability, Neurocomputing, Journal of Economic Dynamics and Control, Computational Management Science, Journal of Network Theory in Finance and some more. Additionally, he has co-edited two books and two special issues at the Journal of Financial Stability, two special issues at the Journal of Financial Market Infrastructures and one at Complexity. Serafin holds a PhD in Computational Finance from the University of Essex, UK. He is member of the editorial board of the Journal of Financial Stability, the Journal of Economic Interaction and Coordination, the Journal of Financial Markets Infrastructures, the Journal of Network Theory in Finance and the Latin American Journal of Central Banking.

 

Juan Francisco Martínez
Financial Stability Manager, Banco Central de Chile

Juan Francisco has been the Central Bank's Financial Stability Manager since November 2020. Previous positions in the Bank include Head of the Financial Analysis Department, Head of the Banking Analysis Group (2014-2019), and Head of the Macro-Financial Models Group of the Financial Research Department (2011-2014).

He holds a degree in Industrial Civil Engineering and a Master's degree in Applied Economics from Universidad de Chile. He also holds a Master's and a PhD in Financial Economics from the Saïd Business School, Oxford University.

Before joining the Bank, he served in various positions in the private and public sector, including Research Fellow at the Research Department of the Inter-American Development Bank (IDB) in Washington DC (2006-2007); Head of the Studies Department of the Public Procurement and Contracting Directorate of Chile's Ministry of Finance (2008-2009); and Expert Consultant to the International Monetary Fund on banking stress tests.