Delegates representing Central Banks of six COMESA Member States completed oneweek training organized by the COMESA Monetary Institute on “Transmission Mechanism of Macro Prudential Shocks to the Financial System: Application of Vector Auto Regressions (VAR), Structural VAR (SVAR) And Vector Error Correction Models (VECM)” The training was conducted on 18 – 22 March 2018 in Nairobi, Kenya with participants drawn from Sudan, Egypt, Democratic Republic of Congo, Uganda, Zimbabwe and Zambia.

“The training was motivated by the fact that macro prudential shocks have potential to disrupt the normal credit intermediation channel and may result in a widespread curtailment of credit to bank dependent borrowers, thereby disrupting the entire financial system,” the Director of the COMESA Monetary Institute Mr. Ibrahim Zeidy said. He underscored the importance of
understanding the transmission mechanism of macro prudential shocks, in order to safeguard the financial system against the build-up of systemic risk.

The training would help to understand the interdependencies among key financial and macroeconomic variables and the feedback effects thereof hence an important step towards designing appropriate macro prudential policies.

Further, it will enhance the capacity of analyzing the most important features of transmission channels of macro prudential shocks on the financial system, especially during periods of extreme widespread financial distress. Other benefits of the training are in deepening understanding of the interdependencies among key financial and macroeconomic
variables and the feedback effects thereof, and sharing experiences and networking.