Financial Independence, Reporting and Accountability for Central Banks

Transcription

1 Since 1999, Central Banking Publications has organised annual residential training courses/seminars which have been attended by more than 4,500 central bankers and supervisors from over 140 countries. Financial Independence, Reporting and Accountability for Central Banks 9 12 September 2014, Christ s College Cambridge Course Chairman Rudy Wytenburg Deputy Chief Financial Services Bank of Canada Series Advisor Charles Goodhart Professor Emeritus London School of Economics Financial Markets Group

2 Dear Delegate, The unprecedented expansion of central banks balance sheets since the start of the crisis is certainly revealing. It shows that central banks balance sheets are becoming more and more exposed to economic risk and political pressure. Eventually, this may result in a substantial amount of negative capital in a central bank s balance sheet. This is undesirable, because it could undermine a central bank s credibility and independence. Klaas Knot, President, The Netherlands Bank, October 2013 The measures taken to combat the crisis threw central bank balance sheets to the fore. As a result the profile of accountants and financial directors in central banks is on the rise. They are increasingly becoming the first line of defence. Central banks need more and more to explain to politicians and the public the impact the crisis had, and is having, on their balance sheets. Furthermore, they need to prepare themselves and their stakeholders for the impact of withdrawal of unconventional measures. As central bankers prepare for the possible volatility this might bring, they need to ensure they have a solid framework for accountability and transparency in place. Increasingly they recognise the need to revisit arrangements for profit-andloss sharing and capitalisation with government to achieve and maintain financial independence. They acknowledge, too, that at a time of pressure on public finances they must not only ensure they are using public funds wisely, but demonstrate this, by applying appropriate budgeting practice. Here, the financial reporting standard is the key. Yet, the debate has only intensified as to whether standards for financial reporting, governance and internal controls developed for commercial entities are applicable in central banks. How should profit be recognised and how can distribution arrangements be strengthened? How can central bank financial statements address issues of transparency, accountability and help explain a bank s functional performance? This course is designed to equip delegates in charge of the financial reporting function to tackle these challenges. Key speakers include: Robin Darbyshire, Former Financial Accountant, Bank of England Magnus Eklund, Financial Controller, Sveriges Riksbank Beverley Standen, Finance Expert, Financial Reporting and Policy, European Central Bank Günther Hobl, Unit Head, Treasury Risk Monitoring Group, Accounting and Cash Audit Department, National Bank of Austria Key topics include: Central bank financial independence Reporting performance by function How much capital does a central bank need? (And how can this be ensured?) IFRS adoption and amendments Financial risk reporting Budgeting practice in focus We are delighted to welcome Rudy Wytenburg, Deputy Chief, Financial Services, Bank of Canada, as chairman. All discussions are held in roundtable format to encourage participants to share their experiences and debate the pressing issues in their field. Each session allows participants opportunities to question an expert panel of speakers and to benchmark themselves against good practice internationally. This format, as more than 4,500 central bankers and regulators can attest, encourages delegates to quiz panellists, raise issues and discuss solutions to the specific challenges they face. We look forward to welcoming you to Cambridge on September 9th. Yours sincerely, Robert Pringle Chairman Central Banking Publications This course is a unique opportunity to learn from the other experiences, to take suggestion by other delegates and to build a network of people with common interest. Giovanni Candura, Finance Expert, Accounting Department, Bank of Italy

3 Thursday Tuesday 918 September April Financial Independence, Reporting and Accountability for Central Banks Targeting Financial Independence Right Practice Under the New Normal Central bank financial strength and independence Rudy Wytenburg, Deputy Chief, Financial Services, Bank of Canada What are the balance sheet dynamics confronting central banks? Are all central banks facing the same situation? What are the consequences of the accumulated level of foreign reserves and the introduction of macroprudential policies? The chairman will introduce the course and its objectives. He will make the case for central banks to become more proactive in explaining policy-related changes to their balance sheets, functional outcomes and relating use of resources to these, especially as the level of resources is likely to increase. Participants will be encouraged to share the experience and outlook for their domestic institutions and economies. The post-crisis central bank a first view Grace Koshie, Former Secretary to the Board, Reserve Bank of India Central banks and their mandates are evolving. They have new responsibilities, which have yet to be reconciled with their pre-crisis ones. They face a new set of expectations from politicians, stakeholders and the public. They operate in new markets and supervise new entities. Three results follow: first, central banks are revisiting assets, transactions, collateral and counterparties; second their balance sheets are exposed to new risks and contingent liabilities that call in to question traditional concepts of central bank capital and loss sharing with the finance ministry; and, third, they must deliver new levels of transparency and accountability. The speaker will draw on the Reserve Bank of India s experience in dealing with the crisis to look at how the policies and practices of central banking have changed in the past 3-5 years and how, crucially, these changes have impacted balance sheets and independence. Workshop: review of participants balance sheets Led by the chairman How are and will macroprudential policies impact central bank balance sheets? Will central banks accumulate ever greater foreign exchange reserves portfolios and how will they manage them? Will central banks need more sophisticated risk management frameworks and balance sheet stress tests to justify higher levels of capital? Do central banks finance and risk management functions need to raise their profile within the institution? In this practical workshop participants will be invited to examine comparative structures and issues in the development of their central banks balance sheets over the past five years. Discussion will focus on identifying past, current and future strengths and weaknesses. About the course chairman: Rudy Wytenburg is the deputy chief, financial services for the Bank of Canada. He has headed up financial departments at several leading Canadian organisations in both the manufacturing and services sectors, in both the private sector and in government. He joined the bank ten years ago to lead the Financial Services Department which is responsible for the financial management of the bank and its related entities. He also has played a significant role in many of the central bank s committees and strategic projects. I especially appreciated the international dimension of the seminar. Lenka Krsnakova, Expert, Accounting and Cash Audit Department, National Bank of Austria

4 Cambridge, 2014 Wednesday 10 September Financial Strength, Transparency and Budgeting Maintaining financial strength Robin Darbyshire, Former Financial Accountant, Bank of England Central bank finances are caught between a rock and a hard place. Central banks need sufficient financial resources to perform their functions effectively and independently. Any shortfall and their policy independence may be in jeopardy. It is not without irony then that central banks are being given new powers and responsibilities, which need new and more resources, at a time when low-yielding assets and strained state finances reduce their ability to bolster their financial position. This discussion will cover both balance sheet and income elements of financial independence, including profit distribution arrangements with the government. How much capital does a central bank need? (And how can this be ensured?) Günther Hobl, Unit Head, Treasury Risk Monitoring Group, Accounting and Cash Audit Department, National Bank of Austria At times of heightened uncertainty in financial markets, a strong central bank balance sheet becomes more important for the central bank s credibility. Yet if the financial buffers used to cover losses and interest income is low, central banks may find their financial strength weakening. Moreover, finance ministers still expect dividends. Central banks can and do function with negative net worth, but this can undermine financial independence and threaten policy effectiveness. This session will explore the key elements to determine a sufficient level of capital for central banks and what arrangements can be put in place with government to protect this. Maintaining financial strength: stress testing the central bank s balance sheet Günther Hobl Stress on central bank s capital reserves was a common feature of the crisis. Today, central banks balance sheets are changing in ways that require those in financial reporting to identify and monitor risks that may be building up. As a result, they are increasingly moving away from static models of capital adequacy to adopt dynamic models for risk management and stress testing that can incorporate actual and contingent risks. The speaker will lead the discussion on the general principles for developing such a framework for stress testing along with guidance on technical elements. New challenges facing the reporting function: enhancing central bank transparency Sheila Vokey, Chief of Financial Services and Chief Accountant, Bank of Canada While much about the causes and consequences of the financial crisis remains unclear, two important effects on central banking are already beyond doubt. First central banks are doing more than ever; and second they are subject to more scrutiny than ever before. Those in charge of central bank accounting and reporting are increasingly under pressure from top management to deliver more frequent and both complex yet simply presented reports and forecast. In this roundtable session the chairman will invite participants to talk about the steps they have taken to improve financial accountability and reporting. Budgeting practice in focus Rudy Wytenburg, Deputy Chief of Financial Services, Bank of Canada Budgets are the key tool for measuring the efficiency and effectiveness of a central bank. As such, they are crucial for accountability as central banks ultimately operate with public sector funds. But they are also a cornerstone of independence. What elements of the budget should be approved by the government if any? And how should they be reported? The speaker will draw on experience with both his home central bank as well as private sector practice and work with numerous others to consider a number of practical examples and scenarios.

5 Financial Independence, Reporting and Accountability for Central Banks Thursday 11 September Building the Reporting Framework Reporting performance by function Magnus Eklund, Financial Controller, Sveriges Riksbank Financial statements prepared from a corporate profit-maximiser s perspective are a poor fit for reporting central bank performance. A decline in profits, for example, may be due to foreign exchange reserves falling in value due to domestic currency appreciation. Increasingly, policymakers acknowledge that central banks need to develop reports that explain their financial results with reference to their mandate and policies, and which attribute costs to functions. While a lack of transparency may have been acceptable in the past, today, ongoing analysis and transparency about sources of expenditure as well as income are demanded by external stakeholders. In this session, the speaker will discuss the reasons for functional reporting and what central banks should report about performance and how to do this. Central bank reporting frameworks: ESCB case study Beverley Standen, Finance Expert, Financial Reporting and Policy, European Central Bank Currently, the only international accounting standard specifically designed for central banks is the Eurosystem s accounting rules. These allow central banks who join the euro to report according to a common framework, but they hold lessons that can be applied beyond the single currency area. In this session, the speaker will discuss where the European System of Central Banks framework can add value for central bank reporting, including, notably, the treatment of realised profit and unrealised losses on the profit and loss statement. A central bank perspective on new IFRS amendments Chris Sermon, Senior Manager, PwC IFRS is designed with profit-maximising institutions in mind, which central banks are not. Furthermore, evolution of IFRS and its convergence with US GAAP has produced material changes to the standards that impact on central bank financial statements. This session will review those recent or pending IFRS amendments and analyse them from a central bank perspective. This session will focus in particular on IFRS 9, including impairment, the changes to other comprehensive income, and issues of consolidation. Financial risk management and reporting Chris Sermon The crisis has reinforced the importance of appropriate risk disclosures in central bank financial statements. Here central banks face a delicate balancing act. While the standards define the framework, central banks need to adapt them to meet their own particular needs. Inappropriate disclosures may pose risks to policy outcomes while the unique nature of central bank balance sheets presents particular risks. This session will explore some of the important fault lines, drawing on the speaker s work with central banks around the world. Past attendees include: Bank of Algeria Reserve Bank of Australia Austrian National Bank Central Bank of Barbados Central Bank of Brazil British Virgin Islands Financial Services Commission Bank of Canada Central Bank of Colombia Czech National Bank Central Bank of Ecuador Banque de France European Central Bank Bank of Ghana Central Bank of Honduras Hong Kong Monetary Authority Central Bank of Hungary Reserve Bank of India Bank Indonesia Bank of Jamaica Central Bank of Kenya Bank of Korea Bank Negara Malaysia Reserve Bank of New Zealand Central Bank of Nigeria Central Bank of Oman State Bank of Pakistan Central Bank of Paraguay Central Bank of the Philippines Central Bank of Qatar National Bank of Romania SAMA Monetary Authority of Singapore South African Reserve Bank Bank of Spain Central Bank of Sri Lanka Sveriges Riksbank Bank of Tanzania Bank of Thailand Bank of England Federal Reserve Bank of New York Bank of Zambia

6 Cambridge, 2014 Friday 12 September Risk Management and Disclosure The role of the audit committee: transparency and fiduciary duties Speaker to be confirmed Transparency and accountability are key governance responsibilities. Default fiduciary duties include the board s requirement to testify to the existence and operation of an appropriate system of internal controls, the integrity of the financial statements and the appropriate use of the bank s resources. The audit committee, a non-executive subcommittee of the board, exists to perform this function. How has the crisis impacted on, expectations of the audit committee? This session will examine how an effective central bank audit committee interacts with the accounting function, internal audit, risk management and external auditors in the new normal environment. IT alignment with financial and operating reporting Rudy Wytenburg Big data is catching up with central banks. A central bank s policy focus produces its own versions of IT challenges that often requires complex and specialist software, particularly in the reserve management and market operations areas. The IT systems must be able to integrate the information from all the specialist policy applications and combine it in a central general ledger that meets information requirements for policy decisions, statistics and operational reporting. In this session, the speaker will discuss how central banks can tackle these challenges in an environment when the timeliness and disclosure demands are proliferating. Lessons and action points Led by the chairman In this session, the chairman will review the key lessons from the presentations and discussions throughout the course. Delegates will be asked to reflect on how the lessons learnt over the four days can be applied at their home institutions and how emerging risks can best be managed. CBP s Autumn Series 2014 also features the training seminars: Effective Oversight of Financial Market Infrastructures Government Debt Management: New Trends and Challenges IT Governance for Central Banks Legal Risks and Good Governance for Central Banks The Changing Framework of Monetary Policy Operations Communications and External Relations for Central Banks Economic Analysis and Forecasting for Macroprudential and Monetary Policymaking Human Resources: Enhancing Human Capital and Facilitating Higher Performance Knowledge Hubs: Managing Central Bank Libraries and Information Centres New Challenges in Financial Market Supervision & Regulation Risk Management for Central Banks

7 Financial Independence, Reporting and Accountability for Central Banks Booking details Course fee: 3,000 4-Day (3 nights) residential course Course fee includes: en-suite accommodation, meals, refreshments, course documentation and a complimentary copy of the most recent issue of the Central Banking journal. Substitute delegates can be accepted should the registered delegate be unable to attend; please let us know prior to the event. How to book There is a booking form overleaf. Please use one of the following methods to book your place: Online: Call: Clare Hope on +44 (0) / +44 (0) conference@centralbanking.com Fax: Attention of Central Banking Events to +44 (0) Post: Central Banking Publications Incisive Media Haymarket London SW1Y 4RX, UK The Venue Christ s College, St Andrew s Street, Cambridge, CB2 3BU, UK Christ s College is one of England s oldest university colleges and traces its origins back to 1439 when it was founded by William Byngham as God s house and adopted by King Henry VI. The college is conveniently situated in the heart of Cambridge surrounded by all the historical sites, and is one hour by train from London. About Central Banking Publications Central Banking Publications events division is the leading independent organiser of public policy seminars/training courses for the official sector. Since 1999, CBP has hosted roundtable seminars and training courses for over 4,500 senior policymakers from central banks, ministries of finance and financial regulatory agencies around the world. Senior officials from more than 140 countries have attended these meetings over the past decade and a half.

8 Financial Independence, Reporting and Accountability for Central Banks 1. Delegate details: PLEASE WRITE IN CAPITALS Mr/Mrs/Ms: First name: Job title: Department: Organisation: Address: Telephone: Facsimile: 1: 2: Surname/Family name: Postcode: Please provide us with the direct address of the delegate and an additional address if possible. This is very important because all correspondence with delegates is by . Course fee: 3, Payment details: Invoice: If you select this option an invoice will be sent to you by and by post. If you would like to provide different details to the above for the invoice please notify us when sending back the booking form. Credit card: please charge 3,000 to my Visa Mastercard American Express Card No: Cardholder name: Cardholder address (if different from above): Security Code: Expiry date: Signature: Date: I have read and agree to the terms and conditions below. Signature: Date: Terms & Conditions: A refund (less 10% administration fee) will be made if notice of cancellation is received in writing three weeks before the event. We regret that no refunds can be given after this period. In addition delegates are wholly responsible for obtaining any necessary entry visas and refunds cannot be given as a result of non-attendance arising from a failure to secure such visa. A substitute delegate is always welcome at no extra charge. The programme may change due to unforeseen circumstances, and Incisive Media reserves the right to alter the venue and/or speakers. Incisive Media accepts no responsibility for any loss or damage to property belonging to, nor for any personal injury incurred by, attendees at our conferences, whether within the conference venue or otherwise. Data protection: by registering for a Central Banking training course you will receive further information relating to this event. In addition we will send you information about our other relevant products and services which we believe will be of interest to you. If you do not wish to receive other relevant information from Incisive Media via a particular medium please click the following relevant boxes: mail phone fax Incisive Media will also allow carefully selected third parties to contact you about their products and services. If you do not wish to receive information from third parties via any of the following media please tick the relevant boxes: mail phone. Please tick if you are happy to receive relevant information from carefully selected third parties by and fax. Registered Office Haymarket House, Haymarket, London, SW1Y 4RX UK. Registered in England and Wales number VAT No. GB P.