Financial stability is both a national and a multilateral concern. Increasingly interconnected markets, including the presence of global banks, mean that a financial crisis taking place in one part of the world can quickly have negative spillover effects globally. Whether global or homegrown, financial instability and crises have a serious impact on living standards and everyday life, particularly in low-income countries where social safety nets are often inadequate.
Financial stability is key to economic growth. It reduces uncertainty and encourages investment, resulting in more jobs and poverty reduction. Sound regulatory and supervisory systems are essential underpinnings to financial stability. They are necessary to maintaining the strength, fairness and stability of financial sectors.
Toronto Centre programs help financial regulators and supervisors put in place the best practices for their country’s circumstances. For example, we have helped many countries implement risk-based supervision; this allows them to focus their resources on identifying areas where an individual financial institution, or their financial sector as a whole, is most vulnerable.
We also offer programs on macroprudential surveillance. These sessions show participants how indicators of the health and stability of financial systems can be monitored and used as inputs to their supervisory work. Recognizing the potential contagion effects in large conglomerates, we offer programs on consolidated supervision with the goal of mitigating any negative consequences that a failure in one part of a conglomerate could have on another or on the financial system as a whole.