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The role of central banks in macroeconomic and financial stability

Central banks in Africa are changing as the continent becomes increasingly integrated with the global financial system. In this context, governors from major central banks met in Basel on 11-12 May 2013 to compare notes on their experiences in dealing with the challenges of increased financial integration. Four important challenges were analysed at this meeting. First, the recent surge in pan-African banking is driving a new wave of financial integration. This has many benefits for the region, but confronts central banks and supervisors with new challenges in monitoring and managing risks. Second, central banks have a key role in developing local debt markets. The development of local currency bond markets is critical to Africa’s financial development and resilience to shocks. Third, financial stability frameworks need to be strengthened. Central banks must have a major voice in financial stability policy which is closely linked with monetary policy.  Finally, the prolonged period of higher-than-average commodity prices, often attracting heavy capital inflows, has boosted growth but may also have created its own financial stability risks. In this context, a macroprudential policy perspective that addresses such risks can help to limit systemic threats.” By Madhusudan Mohanty, Head of Emerging Markets, Bank for International Settlements. BIS Papers No 76, February 2014


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