Macro Prudential Framework
Framework for monitoring and addressing systemic risks in Zambia's financial system.
Overview
The macro-prudential framework complements micro-prudential supervision by focusing on the stability of the financial system as a whole. It aims to limit systemic risk by addressing the build-up of vulnerabilities that could lead to widespread financial distress.
The framework involves continuous monitoring of financial system risks, the deployment of policy tools to address identified vulnerabilities, and coordination with other regulatory authorities.
Policy Tools
Capital Buffers
Countercyclical capital buffer and systemic risk buffer for banks
Leverage Ratio
Limits on excessive leverage in the financial system
Concentration Limits
Restrictions on large exposures and sectoral concentrations
Liquidity Requirements
Liquidity coverage and net stable funding ratios
Loan-to-Value Limits
Caps on mortgage and consumer lending
Stress Testing
Regular assessment of financial system resilience
Objectives
Prevent Build-up of Risks
Identify and address systemic risks before they materialize
Build System Resilience
Ensure the financial system can absorb shocks
Limit Contagion
Reduce interconnectedness risks and spillover effects