Centre for Technical Central Bank Cooperation

Centre for Technical Central Bank Cooperation Annual Report 2012/2013

Centre for Technical Central Bank Cooperation Editorial...5 Tasks...6 Memoranda of Understanding (MoU)...7 Project examples...9 International central banking courses...9 Bilateral projects...21 Activities in Germany...22 Activities abroad...31 Joint activities with other institutions...42 Projects with third-party funding...47 Overview in figures...50 Outlook...53 About us...54 List of abbreviations...60 Imprint...62

Page 5 Editorial As a result of the global and European economic and financial crises, the external operating environment for many central banks around the world has changed fundamentally. As well as acting to deal with acute crisis situations, they have also been assigned new responsibilities in the case of the Deutsche Bundesbank, for instance, a macroprudential mandate. Naturally, these developments have had a considerable effect on internal operations within the central banks themselves, sometimes requiring specific tasks to be refocused while resources stay the same. In the area of Technical Central Bank Cooperation, these changes have not curtailed activities in general but, rather, have mainly led to efforts to enhance synergies by means of a focused extension of cooperation at the regional level. of our foreign partner institutions and on making our programmes more solution-oriented and interactive. Thus, in the period under review, despite the additional workload engendered by the crisis, the Bundesbank s programmes within the framework of its Technical Central Bank Cooperation (TCBC) have remained open to all central bank customers around the world. Most cooperation activity was actually concentrated on EU accession candidates, the countries involved in the European Neighbourhood Policy, successor states to the Soviet Union and key emerging economy countries. Furthermore, our partner institutions were able to benefit from the Bundesbank s depth of knowledge and experience not only in core business areas, but more widely with regard to good governance, with a sharper focus on current issues. It was clear once again that it was mainly practical and practicable solutions that were sought by central banks from around the world for the challenges we face. Over the past year, we have therefore focussed on tailoring our work as closely as possible to the questions and needs In future, the Bundesbank will continue to do its best to advise and assist foreign monetary authorities that seek its support. Aside from fundamental central banking issues, we will also continue to monitor developments at the current end and take these into account wherever possible. As in previous years, this Annual Report aims to provide an initial overview of the Bundesbank s wide range of activities in this challenging area of responsibility. I hope that the information will be of interest and I look forward to welcoming our guests from around the world in the following year. Dr (hc) Rudolf Böhmler Member of the Executive Board Deutsche Bundesbank

Page 6 Tasks The Bundesbank has been involved in global central bank cooperation for more than 20 years, sharing its knowledge and experience with central banks from every corner of the world. It is thus in contact with the central banks of more than 90 countries, with the main geographical focus of its cooperation on the EU accession and candidate countries, the successor states of the former Soviet Union, and China. The stable demand over many years points to a strong need for the exchange of knowledge and experience, which is bound to intensify further as a result of the economic and financial crisis and of the mutual dependencies brought about by globalisation. financial and monetary system, banking supervision, cash management and payment systems. However, more recently, the financial crisis has led to topics in the field of financial stability, banking supervision issues and risk management taking centre stage. In conceptual terms, the Bundesbank has shown itself to be flexible. It is continually adapting its range of courses to reflect the constantly changing demand. Courses on pure knowledge transfer are, to an increasing extent, moving backstage. Activities that provide opportunities for discussion and which foster the exchange of experience are becoming more and more popular and, with regard to the target group, are proving more efficient. The Centre for Technical Central Bank Cooperation is responsible for organising and implementing all activities carried out under the aegis of the Bundesbank s technical central bank cooperation (TCBC) programme. The content of the courses on offer basically spans the entire spectrum of the Bundesbank s five core business areas monetary policy, the The Bundesbank makes use of its contacts with various German institutions and with other foreign organisations linked to central banks in order to provide a complementary integrated advisory service. This enables concepts to be thoroughly examined from various perspectives and ensures that optimal use is made of the resources. Deutsche Bundesbank, Frankfurt am Main, Central Office

Page 7 Memoranda of Understanding (MoU) In March 2013, the Governor of the Central Bank of the Republic of Turkey, Dr Erdem Başçi, and the President of the Deutsche Bundesbank, Dr Jens Weidmann, signed a joint Memorandum of Understanding (MoU) on cooperative activities under the aegis of the technical central bank cooperation programme. The aim of the MoU is to build on the longstanding traditionally positive and amicable relations between the two central banks by initiating a regular bilateral dialogue at different levels in these institutions hierarchy. At the same time, the agreement opens the window for a two-way exchange of staff and in so doing goes a step further than existing agreements with other institutions. Individual MoUs with the National Bank of the Kyrgyz Republic and with the State Bank of Vietnam were first signed as far back as November/ December 2012. During the reporting period, progress was also made regarding the preparatory work on the MoU with the Arab Monetary Fund (AMF), the Abu Dhabi-based sub-organisation of the Arab League responsible for monetary policy, which is due to be signed in the near future. In this manner, the Deutsche Bundesbank is pushing ahead with its efforts to extend regional cooperation between cross-border institutions which have links to a central bank. The State Bank of Vietnam The National Bank of the Kyrgyz Republic Türkiye Cumhuriyet Merkez Bankası

Page 9 Project examples International central banking courses The international central banking courses meet the demand for general and basic central bank-related issues. However, the courses are also increasingly regarded as a platform for the interactive multilateral exchange of views and ideas. In addition to the traditional course structure of seminars with specialised lectures, some courses are now offered in the form of workshops, training courses or expert panels, where the active involvement of participants is encouraged. This has widened the target group, so that the courses attract specialists as well as junior central bank staff. Twenty four international central banking courses were held in the reporting period from 1 July 2012 to 30 June 2013. These were attended by 474 central bank staff from 84 countries. The courses, which lasted three or five days, were normally held at the Bundesbank s Central Office in Frankfurt am Main. Due to capacity limitations, only one member of staff from each central bank can attend each course, ensuring the international character of the courses.

Page 10 All 24 courses in detail Implementing monetary policy First workshop Date: 6 10 August 2012 Markets Department: Christian Ganthaler, Daniel Gybas, Dr Carsten Hartkopf, Benjamin Stamer Risk Control Division: 1 specialist Regional Office in Hesse: Christian Völlmer Centre for Technical Central Bank Cooperation: Sonja Juko Number of participants: 22 Second workshop Date: 7 11 January 2013 Markets Department: Dr Carsten Hartkopf, Marc Resinek, Benjamin Stamer, Christian Völlmer Risk Control Division: 1 specialist Centre for Technical Central Bank Cooperation: Sonja Juko, Sandra Machura, Jens Meilinger Number of participants: 15 The workshop took place twice in the reporting period. It provided an in-depth insight into Bundesbank practices in the area of liquidity management, money market monitoring and decisions on non-standard monetary policy measures during the crisis. The participants presentations fostered an exchange of views and a comparison of operational frameworks for monetary policy and the responses to financial market upheavals. PC-based exercises and case studies provided an opportunity for applied work. Managing surplus liquidity Expert panel Date: 14 16 August 2012 Markets Department: Dr Carsten Hartkopf, Dr Franziska Schobert Centre for Technical Central Bank Cooperation: Sonja Juko, Dr Martin Pontzen National Bank of Poland: Jaroslaw Wisniewski Czech National Bank: Miroslava Mrlíková Number of participants: 17 The expert panel brought together experts from various countries to discuss the causes of surplus liquidity in different national contexts as well as alternative ways for central banks to manage surplus liquidity. Participants presented case studies from their countries to illustrate how surplus liquidity was affecting them. A lively discussion evolved around the definition of autonomous factors. While everyone agreed that the definition of autonomous factors was crucial for the assessment of surplus liquidity it became clear that the understanding of the concept may vary. A further area of focus was how the management of surplus liquidity can affect the strength and the image of a central bank. Again, the discussion highlighted that there is no straightforward answer. All in all, the expert panel underlined how exchanges of opinion among staff from central banks around the world helps to broaden individual participants perspectives regarding specific issues and thus improve mutual understanding.

Page 11 Human resources management Date: 27 31 August 2012 Human Resources Department: Frank Elster, Alexander Faber, Sina Kaidas, Mario Stolzenbach Department for Economic Education: Katja Lung Administration and Premises Department: Stefan Gottwald Banque de France: Corinne Garaud Number of participants: 22 The seminar provided the participants with an overview of the legislative framework applying to human resources and the various staff management instruments which have been developed against this background. It also gave them an opportunity to draw up a catalogue of issues to be discussed with the attending Bundesbank speakers. The event was rounded off by a presentation on the demographic situation at the Banque de France and a discussion of the long-term demographic plans of the Bundesbank and the Banque de France. Frankfurt branch: Axel Fickeis, Jürgen Schühler Number of participants: 23 Just as in previous years, cash experts from the partner central banks were given the opportunity to gain an insight into the various facets of the Bundesbank s role in the cash cycle. Among other things, the presentations on private cash recycling in Germany which is making ever greater inroads and on the foreign demand for euro bank notes issued in Germany both met with keen interest on the part of the participants. This year s visit to the National Analysis Centre (NAC) in Mainz again proved particularly popular. The wideranging activities of the NAC were comprehensively explained. Moreover, a representative from the State Criminal Investigation Office in Bavaria was present, thus allowing participants to discuss international aspects of the business of combating counterfeits from a police agency perspective. As in the past, the seminar concluded with a visit to the Frankfurt branch, enabling participants to see for themselves how everyday cash processing works. Time and again, the visitors come away impressed by the efficient way in which cash management working processes are organised. Cash management and combating counterfeit money Date: 10 14 September 2012 Cash Department: Markus Altmann, Nikolaus Bartzsch, Dierk Dominicus-Schleutermann, Sven Eckel, Rainer Elm, Torsten Erlebach, Helmut Hammes, Andreas Hoffmann, Thomas Langer, Manfred Muris, Raoul Nägele, Thomas Reifenberger, Jens Riechmann, Holger Sandig, Dr Heike Wörlen State Criminal Investigation Office in Bavaria: Günter Seibold Banking supervision under the framework of Basel II and Basel III: advanced Date: 24 28 September 2012 Banking and Financial Supervision Department: Robert Borchardt, Jochen Flach, Thomas Morck, Heiko Müller, Stefan Rehsmann, Christian Stark, Melanie Troschke Regional Office in Rhineland-Palatinate and Saarland: Gulsana Barpiyeva, Dr Andreas Bascha, Helmut Stothut Number of participants: 26

Page 12 On the one hand, the advanced seminar on banking supervision under the framework of Basel II and Basel III focused on a more pragmatic look at the supervisory review process and its implementation in Germany. Experienced experts from a Regional Office of the Deutsche Bundesbank provided first-hand experience and real life examples from their day-to-day work as supervisors. On the other hand, a detailed overview of the more advanced approaches for measuring credit and market risk was given (internal rating based approach, market risk models). Conceptual issues of how to deal with systemically important institutions were discussed. The seminar was rounded off by selected topics such as securitisation or implementing Pillar III in Germany. offered a platform for an exchange of views and experiences on current communication challenges. The course was organised by the Bundesbank as a workshop and gave all the participants the chance to exchange ideas not only with experts from the Bundesbank but also with colleagues from all over the world. In addition to lectures given by Bundesbank specialists, the participants took an active part in the course and presented the public relations work of their own central banks. The main topics discussed during the course were social media, communication strategies, media relations, internal communications, conference organisation and money museums. Public relations Workshop Date: 8 12 October 2012 Communications Department: Michael Dear, Daniela Hentschel, Sandra Holst, Manfred Iwan, Astrid Lipfert, Dr Elmar Stöss Department for Economic Education: Dr Benedikt Fehr, Dr Andreas Kaun, Magnus Mäkelä, Dr Ulrich Rosseaux President s Office: Katja Freter-Bachnak Number of participants: 20 In recent years, central bank communication has changed considerably. First, because of changing media landscapes and new communication technologies such as social media platforms. And second, because of the introduction of new non-standard monetary policy tools in many countries. Furthermore, central banks have intensified their efforts towards achieving greater transparency. Taking into account these developments, this five-day course on public relations Combating money laundering Date: 22 26 October 2012 Legal Department: Ron Francke, Jörn Kellmann Deutsche Bank AG: Alexander von Hardenberg Commerzbank AG: Dr Sigrun Beiderwieden Western Union Payment Services Ireland Ltd: Siegfried Bergles Federal Financial Supervisory Authority (BaFin): Sven Jerosch, Tatjana Leonhardt, Christina Pitzer Federal Criminal Police Office: Rudolf Stein Centre for Technical Central Bank Cooperation: Jens Fuhrmann Number of participants: 25 What makes this seminar special is the fact that it gives a variety of external specialists the opportunity to report on their efforts to combat counterfeits from an individual professional perspective. This ensures that the participants from partner central banks

Page 13 obtain a realistic and comprehensive overview of how money laundering is combated in Germany. Two experts from the Bundesbank s Legal Department kicked off events by outlining the agenda of the seminar. Next, speakers from the Deutsche Bank and the Commerzbank took the floor to vividly explain the anti-money laundering measures that are applied in the commercial banking sector. Given that the main agents involved in the fight against organised money laundering alongside the commercial banks are BaFin (the Federal Financial Supervisory Authority) and the Bundeskriminalamt (Federal Criminal Police Office), the lively discussion which ensued between the participants and the representatives of these agencies came as no surprise. The seminar was rounded off with individual presentations by the participants themselves, thus allowing an international exchange of ideas. Payments and securities settlement systems First seminar Date: 5 9 November 2012 Payments and Settlement Systems Department: Daniel Ferchland, Julia Frölich, Marcus Henrik Härtel, Bärbel Hofmann, Christin Knauft, Evelyn Potratz, Anja Prescher, Björn Radtke, Christine Stein, Saskia Straßer, Jürgen Thoma Centre for Technical Central Bank Cooperation: Jens Fuhrmann Number of participants: 19 Second seminar Date: 3 7 December 2012 Payments and Settlement Systems Department: Andrea Friedrich, Marcus Henrik Härtel, Bärbel Hofmann, Dr Johannes Kaiser, Andreas Kick, Johannes Klocke, Andreas Müssig, Roland Neuschwander, Evelyn Potratz, Anja Prescher, Björn Radtke, Christine Stein, Jürgen Thoma, Sylvia Tyroler Number of participants: 26 As in 2011, two identical seminars on the subject of Payment and securities settlement systems were held in 2012 in quick succession to meet the high demand for seminars addressing topics relating to cashless payments. The participants were soon enlightened to the fact that Germany is not alone in experiencing fast-moving changes to its payments landscape; the trend is affecting the rest of Europe as well. In this context, the driving factors behind this trend were described, namely competition, cost pressures, the expanding euro area and technological advances. As usual, much attention was paid to the topics of SEPA, TARGET2 and TARGET2-Securities. With regard to SEPA, it was clearly emphasised that the launch of the Single Euro Payments Area in 2014 will change the face of Europe by putting in place a single European environment for euro payments for the first time. In this context, attention was drawn to the very urgent need for national systems to quickly adjust and make the necessary changeover as the countdown is already well underway. Since the oversight of payment systems is a core task of the Bundesbank and a vital factor in maintaining and strengthening the stability of the financial system, the seminar again encompassed the topics Payment systems oversight and Oversight of payment instruments, as well as another established element, the workshop, which takes place at the end of the seminar. This gives participants a good opportunity to exchange ideas and knowledge and to present their findings to the Bundesbank experts.

Page 14 Price and volume indices in official statistics theory and practice Training course Date: 19 23 November 2012 Speaker: Statistics Department: Dr Jens Mehrhoff Number of participants: 17 Risk management for central bank assets Workshop Date: 21 25 January 2013 Risk Control Division: Dr Ralf Körner Centre for Technical Central Bank Cooperation: Dr Thomas Goswin Number of participants: 15 Key macroeconomic indicators, such as consumer prices and gross domestic product (at previous-year prices), are widely used as a means of monitoring the state and development of the economy. Movements of such price and volume measures are used in shortterm business cycle analysis, not least within central banks. The recent financial crisis highlights again the need for high-quality data to keep monetary policy makers and macroprudential authorities well informed. This training course for economists and statisticians introduces participants to price and volume measurement in official statistics. Both index theory and its application in practice are covered. By way of empirical examples, the course addresses the use of Microsoft Excel and various topics relating to price statistics and national accounts: axiomatic and economic approaches, elementary and aggregate indices, quality adjustment, and chain indices. Among other things, this course enables participants to calculate index numbers from price and quantity data, to work with indices including unit values and unit labour costs, to rebase and chain-link indices, to aggregate quarterly figures to annual results, to analyse sub-indices and their contributions to the total, to handle infra-annual chain indices, and to impute/quality-adjust prices. The purpose of the activity was to provide an overview of the different risk types which have been identified at the Deutsche Bundesbank. This involved defining the various risk types as well as identifying evaluation methods currently used not just by the Bundesbank but also by national central banks around the world. In a second step, the participants from 15 different countries presented an overview of the risk structure of their respective central bank and highlighted the most crucial risks which they have identified. Developing from this, the course finished with a discussion and an exchange of experience regarding risk management. On-site banking supervision Date: 21 25 January 2013 Regional Office in Berlin and Brandenburg: Alexis Beck, Markus Börner, Dr Karsten Brückner, Thomas Dwelk-Klews, Tino Fetting, Dr Dolores Ganz, Uta Köhler, Robert Lux, Andria Wachs Centre for Technical Central Bank Cooperation: Peter Spicka Number of participants: 19 This seminar is one of our key modules in providing advice and expertise in the area of banking and financial

Page 15 supervision. The seminar began with an overview of the German banking system and banking supervision in Germany. This was followed by an explanation of the entire on-site inspection process, starting with the identification of examination needs within the supervisory review and evaluation process and moving on to the examinations for compliance with the minimum requirements for risk management before focusing on the documentation relating to the examination process and its results. Further topics included credit risk assessment as well as the approval and evaluation of internal rating systems, market risk assessment and the examination of liquidity risk management. The seminar was rounded off by a discussion of international developments in banking supervision and a look at Basel III. The seminar offered plenty of scope for an exchange of views between experts and participants on the challenges that the successful on-site examiner has to overcome. The training course provided an introduction to the modern X-12-ARIMA seasonal adjustment program. Developed by the US Census Bureau, this procedure is used by both the Bundesbank and the European Central Bank for time series analysis. First of all, the basic features of the program were explained to interested economists and statisticians who did not need any particular prior knowledge of seasonal adjustment procedures. Besides the mathematical modelling of the unadjusted series and the estimation of the seasonally adjusted data, this included the verification of seasonal and working-day adjustments on the basis of quality criteria. The second part of the training course sought to provide the participants with a certain degree of practical experience and confidence in applying the procedure. During the practice session (to which participants could bring their own data), participants were able to practice using X-12-ARIMA, discuss problems regarding the use of the program and, finally, exchange views on how to interpret the results obtained. X-12-ARIMA seasonal adjustment of economic data Training course Date: 4 8 February 2013 Statistics Department: Robert Kirchner, Jörg Meier Number of participants: 19 Reliable conclusions about current economic developments and turning points in the business cycle can be drawn from a relatively short time-lag if only the last few months of a time series are considered, as they would have been in the absence of seasonal fluctuations. This information can only be obtained by seasonal adjustment. Monetary policy and the financial system Training course Date: 18 22 February 2013 Markets Department: Marius Borchert, Dr Carsten Hartkopf, Dr Franziska Schobert Economics Department: Dr Martin Mandler Risk Control Division: 1 specialist Centre for Technical Central Bank Cooperation: Sonja Juko Number of participants: 26 The training course provided a general insight into the basics of monetary policy. Starting from a general introduction to monetary policy and its connections to the broader financial system, the workshop focused

Page 16 on selected aspects of monetary policy strategy and its implementation. The programme included numerous presentations on topics such as the monetary policy transmission process, the operational framework of monetary policy in the Eurosystem prior to and since the beginning of the financial crisis, risk control measures relating to monetary policy and the conducting of liquidity analyses. The presentations by Bundesbank experts were complemented by case studies organised as a group discussion and accompanied by computer-based simulation exercises which gave participants the opportunity to deepen their theoretical knowledge. Foreign reserve management Workshop Date: 4 8 March 2013 Markets Department: Clemens Werner, Elisabeth Volk, Ilka Heiser, Dirk Saueracker, Markus Grimm, Martin Lindner Risk Control Division: 1 specialist Senior Adviser for Financial Markets: Siegbert Eschenbacher Finance Agency of the Federal Republic of Germany: Thomas Weinberg Centre for Technical Central Bank Cooperation: Dr Martin Pontzen Number of participants: 21 The workshop covered all aspects of currency reserve development, management of currency reserves and risk control. Special focus was given to the Deutsche Bundesbank s historical experiences. In line with current discussions, there was a debate about the reasons for keeping gold and the management of gold reserves. Based on input by specialists from the Bundesbank s Markets Department and Risk Control Division, par- ticipants talked about the level and adequacy of foreign reserves used in reserve management and risk management issues. Discussions were further enriched by participants presentations. Restructuring and resolution of financial institutions Expert panel Date: 12 14 March 2013 Banking and Financial Supervision Department: Dr Judith Eigermann, Stefan Nießner Legal Department: Dr Michael Rötting Regional Office in Hesse: Thomas Grimm German Financial Market Stabilisation Agency: Eva Bauer Centre for Technical Central Bank Cooperation: Peter Spicka Number of participants: 14 The expert panel provided information and promoted an exchange of experience covering the various initiatives to improve the crisis management system and the introduction of appropriate restructuring and resolution mechanisms currently being discussed and developed at the international, European and national level. In this context, the recommendations of the Financial Stability Board for the effective resolution of systemically important financial institutions and the proposal of the EU Commission for a Directive establishing a framework for the recovery and resolution of credit institutions and investment firms were explained to the participants. Moreover, the German Bank Restructuring Act was presented as a comprehensive and ready-to-use framework for crisis management in the banking sector. Experts from 14 countries around the world made an active contribution by describing their experiences in restructuring and resolving financial institutions.

Page 17 The expert panel not only provided new insights into resolution and restructuring practices but also helped to establish new networks between individual participants. Banking supervision under the framework of Basel II and Basel III basic Date: 18-22 March 2013 Banking and Financial Supervision Department: Melanie Armbruster, Michael Ruhl, Gunter Rüter, Karin Sagner- Kaiser, Jörg Schäfer, Dr Tobias Volk, Edgar Weirauch, Volker Zeller Regional Office in Hesse: Thomas Grimm Centre for Technical Central Bank Cooperation: Peter Spicka Number of participants: 20 This seminar has been a fixture of our programme for many years and has been continuously modified to keep abreast of regulatory and supervisory developments. The seminar comprised a selection of the most pressing banking supervisory topics falling under the Basel II and Basel III frameworks, including the definition of capital, the liquidity risk framework, the treatment of systemically important banks, the supervisory review process and its implementation in Germany and how to approach market discipline. Wherever possible, the seminar focused both on theoretical and practical aspects. With a view to sharing insights from past experience, experts were able to give first-hand information. At the same time, all participants were encouraged to become actively involved by engaging in real-life practical examples. Private cash recycling: the challenges for central bank cash management Expert panel Date: 16 18 April 2013 Cash Department: Franz-Josef Behringer, Dierk Dominicus-Schleutermann, Michael Erbert, Markus Floeth, Erwin Gladisch, Andrea Kieper, Uwe Müller, Ralph Rotzler, Dr Heike Wörlen Mainz Branch: Hermann Weber Centre for Technical Central Bank Cooperation: Jens Fuhrmann Number of participants: 11 The expert panel is an excellent vehicle for experts from partner central banks to obtain information about developments in the area of private cash recycling in Germany and to simultaneously learn more about the current recycling situation in the individual represented countries. As in previous years, experts from the Bundesbank s Cash Department took and answered questions from the floor. Their comments on the path which the Bundesbank intends to take in the future regarding cash recycling were of key significance. Supplementing the discussions with the heads of division and experts present from the Cash Department, this year s seminar again featured a visit to the Bundesbank s National Analysis Centre (NAC) in Mainz. This visit allowed participants to gain an insight into the latest developments in the fight against money laundering. The day of events in Mainz finished with a visit to the local branch where numerous questions about the Bundesbank s cash processing operations were posed and answered. The final day of the seminar was enlivened by detailed discussion of the presentations given by individual participants. On the one hand, this drew attention to the current absence of any plans to transfer cash processing to private agents in some countries. On the other hand, it showed that

Page 18 several countries are so far progressed that the entire volume of cash in circulation in these countries is already processed exclusively by cash-in-transit companies and only cash needing to be destroyed is returned to the central bank. There is evidently no clear-cut international answer to the question of whose hands are the best choice when it comes to cash handling. Financial stability, systemic risk and macroprudential policy Workshop Date: 22 26 April 2013 Financial Stability Department: Ramona Busch, Thomas Droll, Corinna Knobloch, Axel Löffler, Martin Ockler, Natalia Podlich, Jörg Sonnenberg Research Centre: Co-Pierre Georg Centre for Technical Central Bank Cooperation: Peter Spicka Number of participants: 20 Financial stability plays a crucial role in the financial system and in the economy as a whole, as the current crisis has shown. Safeguarding the stability of the financial system is therefore a primary task of central banks. The workshop informed participants about key developments with regard to financial stability, systemic risk and macroprudential supervision at an international and European level. Special focus was given to the experience of the Deutsche Bundesbank in analysing financial stability. A comprehensive case study on financial stability and macro stress testing provided participants with an opportunity for identifying, analysing and assessing risks in a fictive economy as well as to discuss the appropriateness of various stress test scenarios and/or to develop stress test scenarios. Controlling at central banks Date: 13 17 May 2013 Controlling, Accounting and Organisation Department: Wilfried Franzen, Eugen Fütterer, Cornelia Große, Uwe Henrici, Anke Jüstel, Karola Kinkel, Stefan Kösters, Esther Landeck, Michaela Leistner, Wilhelm Mailand, Robert Zeiff, Martin Zimmermann Human Resources Department: Alexander Faber Centre for Technical Central Bank Cooperation: Christoph Stute Number of participants: 24 Providing a comprehensive overview of the controlling functions at the Bundesbank, the main topics of this seminar were controlling operations at the ESCB, strategic and budget planning, cost accounting, organisational analyses, the automated staffing assessment procedure for HR-planning, project management and controlling. The seminar was rounded off by selected topics such as IT-controlling and real estate controlling. All in all, the seminar outlined the necessity, as well as the limitations, of controlling at independent institutions, as well as within public and non-profit oriented institutions. IT auditing method for developing an audit programme Expert panel Date: 22 24 May 2013 Audit Department: Jürgen May, Wolf-Rüdiger Mertens, Juliane Ploetz, Kerstin Sciortino, Christian Woll Centre for Technical Central Bank Cooperation: Christoph Stute Number of participants: 17

Page 19 The central topic of this three-day expert panel was the development of a generic audit programme for auditing the IT security management system. First, the structure of an audit programme in general and how to develop it were presented. After compiling a list of potential audit aspects in a brainstorming session, the panel worked in two groups on a generic programme for auditing IT security management. During the group work, participants intensively discussed and evaluated the methodology for developing an audit programme. They reviewed different audit approaches and exchanged their views on the topic of IT security management. Finally, the results were presented to the panel group as a whole. Strategic planning at central banks Expert panel Date: 10 12 June 2013 Controlling, Accounting and Organisation Department: Karl-Heinz Hofmann, Wilhelm Mailand, Michael Peschel Centre for Technical Central Bank Cooperation: Christoph Stute Number of participants: 15 Internal auditing Date: 17 21 June 2013 Audit Department: Michael Deiß, Kurt-Werner Gedick, Jürgen Häcker, Norbert Hübl, Thomas Kaufmann, Mendi Möller, Bernd Nitzschmann, Andreas Piotrowski, Juliane Ploetz, Thomas Scheidt, Heike Vöhringer, Christian Woll Number of participants: 22 The seminar provided in-depth insights into the Bundebank s internal principles and recognised external principles of action for audit activities at the Bundesbank. In this context, the participants were introduced to the auditing methods applied at the Bundesbank, the role of internal audit in risk management, computer assisted audit techniques, audit engagements on cash operations and branches, the annual accounts and the banks budget, IT-Infrastructure, banking supervision, financial stability, statistics, monetary policy operations and foreign reserves management. Furthermore, the concept of different audit types (eg audits of individual business areas/business units) was presented. The mutual sharing of knowledge and practical experience fostered discussions on how to optimise audit operations. The main objective of this seminar focused on strategic planning was to enable a broad exchange of knowledge about practical experience in the area of strategic planning. The participants were extremely interested in receiving detailed information about the different strategic planning processes at the Bundesbank and were also keen to gain a better understanding of the general concepts of strategic planning at other central banks. The seminar offered plenty of scope for an exchange of views between experts on the challenges that the successful auditor has to overcome.

Page 21 Bilateral projects Every year the Centre for Technical Central Bank Cooperation receives a large number of requests from its partner central banks detailing highly specialised training requirements. The members of staff tailor the TCBC activity to meet these requests. Specific issues can often be clarified in greater detail by making factfinding visits to the departments in question. If training is required for a relatively large group of central bankers, seminars are held in the partner country. Small groups often prefer seminars in Germany as an opportunity for establishing contact with a range of Bundesbank experts. Bundesbank specialists frequently also carry out concrete on-site consultancy assignments at partner central banks. In this context, 212 training and consultancy sessions were held during the reporting period from 1 July 2012 to 30 June 2013, attended by 2,589 central bank employees from 49 countries. The following pages describe a selection of bilateral projects in greater detail. This overview illustrates the diversity of the TCBC s activities provided, both from a topic-related and a geographical perspective.

Page 22 Activities in Germany Financial stability Country: Ukraine Date: 10 12 July 2012 Venue: Central Office of the Deutsche Bundesbank Financial Stability Department: Stella Bertelmann, Magdalene Heid, Stefanie Schwarzloh Banking and Financial Supervision Department: Dr Philipp Koziol Centre for Technical Central Bank Cooperation: Peter Spicka Number of participants: 6 This bilateral activity focused on recent developments in the area of financial stability and macroprudential policy, beginning with the institutional framework for financial stability and macroprudential supervision in the EU. After an overview of the role of the Deutsche Bundesbank in assessing financial stability, participants were introduced to a concept for analysing financial stability in emerging market economies. A number of indicators for measuring financial stability were discussed and the international reform agenda was broadly reviewed. Last but not least, participants were given an overview of applied stress testing at the Deutsche Bundesbank. The seminar provided experts from both institutions with an opportunity to engage in a fruitful exchange of views and knowledge regarding recent developments in the area of financial system stability. Challenges of the financial system in conditions of the financial crisis Country: Russia Date: 22 29 July 2012 Venue: Deutsche Bundesbank University of Applied Sciences Deutsche Bundesbank University of Applied Sciences: Prof Thomas Fehrmann, Prof Dr Dr (hc) Erich Keller Regional Office in Hesse: Franz Conrads, Margarete Müller Number of participants: 20 Russian students, 20 German students Students from the Moscow Banking School of the Bank of Russia attended this course at the University of the Deutsche Bundesbank in July 2012. Following on from the start-off event in February 2012 in Moscow, the Bundesbank reciprocated by inviting this group of Russians to visit Hachenburg Castle. The English language seminars, which were also attended by 20 Bundesbank students, mainly focused on the causes, effects and implications of the financial crisis. Professor Erich Keller, Rector of the Bundesbank University, guided the participants through the subject matter, encouraging them to take an active part in the discussions. The seminar was geared to providing the Russian and German students with an overview of market independencies and of the individual phases of the financial and euro-area debt crisis as well as to examining the interaction between a country s credit rating and the solvency of the banking system. In this context, the participants also talked about the monetary policy measures of the European Central Bank and the rescue packages initiated by the EU and national governments. The course ended by taking a look at a number of mechanisms that appear promising as a means of averting similar future crises (creation of a

Page 23 banking union, ESM, the Fiscal Compact). As part of this cooperative arrangement at university level, a seminar was also held in Russia during the reporting period (see page 40). mann, David Krug, Robert Marenow, Wolf Rüdiger Mertens, Juliane Ploetz, Michael Schmidt, Peter Spurtzem, Ulf Stapel Number of participants: 5 Monetary policy Country: China Date: 20 24 August 2012 Venue: Central Office of the Deutsche Bundesbank Economics Department: Dr Ulrich Grosch Centre for Technical Central Bank Cooperation: Sonja Juko, Dr Martin Pontzen Number of participants: 20 The seminar covered a broad range of current issues relating to monetary policy. Aside from more general questions regarding the economic conditions surrounding monetary policy-making in Europe and monetary policy strategy, the presentations focused on specific challenges with a view to its implementation in the currently challenging environment. In this context, a number of sessions dealt with the relationship between exchange rate developments and monetary policy. Participants were interested to learn about the German experience regarding the liberalisation of capital markets and the internationalisation of the Deutsche Mark (DM). Internal audit Country: Serbia Date: 10 14 September 2012 Venue: Central Office of the Deutsche Bundesbank Audit Department: Kurt-Werner Gedick, Thomas Kauf- This tailor-made seminar covered the topics proposed by the National Bank of Serbia. As an introduction, participants were familiarised with the structure and tasks of the Deutsche Bundesbank and the organisational structure of the Audit Department. The various audit guidelines, methods and tools were also presented. Experts from the Audit Department then comprehensively addressed the key aspects of the seminar: preimplementation audits, audits of payment and settlement systems, auditing of IT-Infrastructure, financial audits, the internal audit system and risk management and cash audits. There was also a great deal of interest in risk-based audit planning. The participants keen interest and numerous contributions provided the basis for lively discussions but also made the course a uniquely valuable platform for exchanging knowledge and experience. Economic indices construction methodology Study visit Country: Armenia Date: 17 21 September 2012 Venue: Central Office of the Deutsche Bundesbank, GfK Gesellschaft für Konsumforschung market research institution in Nuremberg, Ifo Institute for Economic Research in Munich Statistics Department: Dr Andreas Lorenz Economics Department: Harald Stahl Federal Statistical Office (Destatis): Wolfgang Eichmann GfK Gesellschaft für Konsumforschung market research institution: Rolf Bürkl

Page 24 Ifo Institute for Economic Research: Klaus Wohlrabe Number of participants: 5 The bilateral study visit was designed to address participants particular interests regarding different matters concerning the methodology of economic index construction. Geared to satisfying the requests of the Central Bank of Armenia, the Centre for Technical Central Bank Cooperation organised discussions with experts from a range of institutions including the Federal Statistical Office (Destatis), the German institute for consumption research (GfK) and the ifo institute. In contrast to normal workshops, the study visit was purely discussion-driven. Short presentations by the different experts served mainly as a short introduction and were followed by an open exchange of experience and views among the participants. Money Museum Country: Montenegro Date: 18 19 September 2012 Venue: Central Office of the Deutsche Bundesbank Economic Education Department: Dr Reinhold Walburg Centre for Technical Central Bank Cooperation: Dr Martin Pontzen Number of participants: 4 The TCBC provided technical assistance to establish the money museum in Montenegro. The museum was successfully launched in summer 2012 and since then, additional requests have been made by the Central Bank of Montenegro for further assistance. The seminar focused mainly on the development of the museum concept. Talent management Study visit Country: Namibia Date: 18 19 September 2012 Venue: Central Office of the Deutsche Bundesbank, Regional Office in Bremen, Lower Saxony and Saxony- Anhalt, Hanover branch Human Resources Department: Frank Elster, Sina Kaidas Hanover Branch: Harold Freiberg Regional Office in Bremen, Lower Saxony and Saxony- Anhalt: Bettina Gechter, Bernhard Häffner Number of participants: 2 As part of a benchmarking visit to several European central banks, the attending representatives of the HR management team of the Bank of Namibia were particularly keen to obtain answers to questions relating to staff adjustments as a result of structural changes and to staff development and organisational development. The programme included a visit to the Bundesbank s Regional Office in Bremen, Lower Saxony and Saxony-Anhalt and to its Hanover branch, allowing time for in-depth talks about the staff adjustment process at branch level. Accounting in central banks Country: Tajikistan Date: 12 16 November 2012 Venue: Central Office of the Deutsche Bundesbank Speaker: Centre for Technical Central Bank Cooperation: Dr Thomas Goswin Number of participants: 5

Page 25 The National Bank of Tajikistan is currently feeling the impact of a modernisation process directed at that country s accounting regulation. In particular, the accounting treatment of central bank services for local commercial banks needed to be reconsidered, with a special emphasis on streamlining the exchange rate regimes for remittances of Tajik oversea-workers (based on Euro) and the ordinary payments of Tajik Banks (based on USD). A process of appropriate procedures for a triangle exchange rate with limited risks to the national bank was developed. Banking supervision High-level dialogue Country: Kyrgyzstan Date: 19 23 November 2012 Venue: Central Office of the Deutsche Bundesbank Centre for Technical Central Bank Cooperation: Jörn Flegler, Peter Spicka, Jürgen Sterlepper Number of participants: 8 The Centre for Technical Central Bank Cooperation welcomed a high level delegation with the Deputy Governor and several senior officers of the National Bank of the Kyrgyz Republic for the official signing of the Memorandum of Understanding (MoU). Herein, our two central banks agreed to the fundamentals and the proceedings for cooperation in the field of technical assistance provided at home in Germany or abroad in Kyrgyzstan. Although some joint banking supervision projects already existed in the past, the formal act of signing the MoU laid the official foundations for strengthened long-term cooperation. applying to micro-prudential and macro-prudential supervision. In view of the great interest shown by our guests in all matters relating to banking supervision and the large number of important questions and contributions to the discussion, participants on both sides expressed a unanimous and keen desire to establish a fruitful cooperation. Budgeting Country: Russia Date: 19 23 November 2012 Venue: Central Office of the Deutsche Bundesbank Controlling, Accounting and Organisation Department: Otto Hubertus Gerlach, Stefan Haas, Esther Landeck, Michaela Leistner, Michael-Hermann Linnemann, René Schöne, Claudia Steinmetz, Robert Zeiff, Martin Zimmermann Centre for Technical Central Bank Cooperation: Christoph Stute Number of participants: 6 The seminar focused on accounting and budgeting, its main objective being to enable a general exchange of knowledge about practical experience in operational planning. The participants were highly interested in receiving detailed information about the different strategic and operational planning processes at the Bundesbank and benefitted by gaining a better understanding of the general idea of cost accounting and budgeting in central banks. In addition to the actual signing ceremony, a seminar provided the delegation with an overview of the various national settings and the international standards

Page 26 Foreign reserve management Countries: Serbia, Macedonia, Georgia Date: 26 30 November 2012 Venue: Central Office of the Deutsche Bundesbank Markets Department: Kerstin Hauenstein, Ilka Heiser, Dirk Saueracker, Dr Karsten Stroborn Risk Control Division: 1 specialist Centre for Technical Central Bank Cooperation: Sonja Juko, Dr Martin Pontzen Number of participants: 8 The joint seminar brought together experts from the Deutsche Bundesbank and participants from the National Banks of Serbia, Macedonia and Georgia. The seminar consisted of a combination of presentations and open discussions on a diverse range of issues relating to the management of foreign reserves. In light of the challenges that the low interest rate environment poses to the management of foreign reserves, topics such as the strategic asset allocation, pros and cons of different asset types as well as risk and performance measurement were of particular interest. In the course of the discussions it became clear that specific institutional and economic environments can significantly limit a central bank s scope for reserve management. Monetary policy during financial crisis Country: Turkey Date: 3 7 December 2012 Venue: Central Office of the Deutsche Bundesbank Markets Department: Markus Reinmuth, Dr Franziska Schobert, Sebastian Weber Centre for Technical Central Bank Cooperation: Sonja Juko, Joachim Schirmer Number of participants: 5 The seminar was designed to cover a variety of subjects relating to monetary policy in the context of the financial crisis. The different sessions provided a platform to discuss and compare Turkey s experience with that of the Eurosystem. While a review of monetary policy strategies provided the starting point, the majority of the sessions focused on operational issues with a view to enabling the implementation of monetary policy in different national contexts. From the perspective of the Eurosystem, the collateral framework and various liquidity management practices were of particular interest. The group also exchanged views regarding the role of central bank communication in times of crisis. Operational risks of credit institutions Country: Russia Date: 3 6 December 2012 Venue: Central Office of the Deutsche Bundesbank Banking and Financial Supervision Department: Karin Sagner-Kaiser Regional Office in Hesse: Antje Windhuis Centre for Technical Central Bank Cooperation: Jörn Flegler Number of participants: 6 Besides an introduction to the economic position of the German and European banking sector covering recent occurrences in the single-currency area, this seminar focused on three major issues in the field of operational risks. The discussion was opened by the participating expert from the methodology department

Page 27 within the Regional Office. In her lecture, she provided in-depth insights into current projects at the international level and into supervisory practice in Germany. In both parts of the course, the methodology used for estimating operational risk was outlined. She also described the ongoing evolution of this area of work. The Russian guests keenly contributed to the discussion, after which she clarified the methodological basis for the following sessions devoted to requirements in daily practice. Given the current framework for banking supervision in Germany and the division between on-site and offsite supervision, both of which are carried out by the Regional Offices of the Deutsche Bundesbank, two representatives from the respective units then took over the discussion. During the on-site supervision, the highly experienced examiner introduced participants to a special probe scrutinising the operational risk position and explained the resulting requirements with regard to the risk management of a bank. Comparing the strengths and weaknesses of the different German and Russian approaches in terms of on-site activities proved a fruitful exercise for both sides. Basel II implementation Country: Albania Date: 20 22 February 2013 Venue: Central Office of the Deutsche Bundesbank, Deutsche Bundesbank University of Applied Sciences Banking and Financial Supervision Department: Karin Sagner Kaiser, Gunter Rüter, Edgar Weirauch Regional Office in Hesse: Rene Dubitzky Deutsche Bundesbank University of Applied Sciences: Prof Thomas Dietz, Prof Dr Dr (hc) Erich Keller Centre for Technical Central Bank Cooperation: Jörn Flegler, Dr Thomas Goswin Number of participants: 8 This activity was a follow-up to two previous seminars held in 2012 in Tirana, Albania. In 2012, the Bundesbank provided technical assistance in the area of banking supervision to support the Bank of Albania in its preparations for the country s planned accession to the European Union. Both the Bundesbank s preceding seminars covered the requirements for achieving a sound implementation of Pillars I and II of the Basel II framework. The treatment of operational risk by off-site supervisors and their application of supervisory sanctions where a bank is found to have severe shortcomings regarding the management of operational risks, rounded off the three major issues handled by this seminar. A longserving off-site colleague explained the interplay between the detected deficiencies in the area of operational risk, in particular an unacceptably high risk position, and the two main options in terms of sanctions, ie capital add-on and risk reduction order. In addition, the seminar gave both sides an opportunity to exchange experience gained using their different approaches, making the event beneficial for the speaker and the participants alike. The follow-up seminar, structured as an interactive dialogue, was designed to close a number of knowledge and experience-related gaps still outstanding from the preparations to align the Albanian legal framework with EU standards. The Albanian colleagues showed a keen interest in the definition of capital, the supervisory treatment of credit risk, market risk, operational risk and the counterparty risk of credit derivatives. A visit to the University of the Deutsche Bundesbank in Hachenburg, where the group was cordially welcomed by Professor Erich Keller, Rector of the University, rounded off the seminar with a final lecture about commodity risk and maturity matters, given by an in-house lecturer.

Page 28 Banking supervision Country: India Date: 18 20 March 2013 Venue: Central Office of the Deutsche Bundesbank Federal Financial Supervisory Authority: Dr Johannes Engels Centre for Technical Central Bank Cooperation: Jörn Flegler, Dr Martin Pontzen Number of participants: 4 The aim of the seminar was to provide a comprehensive insight into the German banking supervision framework. Specialists illustrated different regulatory approaches. The Deutsche Bundesbank s historical experience in terms of handling crises in the past was also covered. The seminar combined the proven content of Basel II with the latest developments in international financial supervision. German credit and debit card system Visit Country: South Korea Date: 26 March 2013 Venue: Central Office of the Deutsche Bundesbank Speaker: Payments and Settlement Systems Department: Marcus Henrik Härtel Number of participants: 18 On the initiative of representatives from the South Korean central bank, the Bundesbank welcomed a South Korean economic delegation to a lecture on the German card payment market. The main focus was on the German debit card scheme and its regulation in both a national and European context. The delegation was given a comprehensive overview of the settlement of card payments in Germany and the links between the individual market participants. In addition, the role and significance of credit cards in the German market was discussed, which raised a number of questions from the participants. Online banking Country: Russia Date: 9 11 April 2013 Venue: Central Office of the Deutsche Bundesbank Deutsche Bank AG: Michael Koch, Hinrich Voelcker Federal Financial Supervisory Authority (BAFin): Jens Gampe Payments and Settlement Systems Department: Andrea Friedrich Deutsche Bundesbank University of Applied Sciences: Uwe Schollmeyer Regional Office in Hesse: Frank Adelmann Centre for Technical Central Bank Cooperation: Jörn Flegler Number of participants: 6 Owing to the technological progress achieved in the mobile application of telecommunications and the internet, numerous new gateways to payment services are being provided by banks and financial service providers around the globe. While a majority of customers regard this as a service improvement, most banks and supervisors see the downside, and are concerned about the swift increase in technological requirements needed to avoid misuse and fraud. The seminar discussions covered numerous aspects of online banking, at all times with a key focus on the topic of IT security. Thanks to the involvement of a

Page 29 number of external speakers, it was possible to compare and contrast the perspectives of commercial banks, supervisory authorities and central banks. The seminar concluded with a talk on the latest developments in online and mobile phone-enabled banking, which also shed light on where things are headed in this area of technology. Basel III Country: Indonesia Date: 22 25 April 2013 Venue: Central Office of the Deutsche Bundesbank Banking and Financial Supervision Department: Melanie Armbruster, Robert Borchardt Regional Office in Hesse: Thomas Grimm Centre for Technical Central Bank Cooperation: Jörn Flegler, Dr Martin Pontzen Number of participants: 6 The objective of the seminar was to give a detailed insight into the changing supervisory framework in Germany and Europe aimed at increasing stability in the banking sector. The strongest focus was on the different amendments made to the Basel III regulation. This revision of key supervisory requirements basically represents a supplement to the Basel II approach, in other words, it has been one of the main regulatory responses to the financial crisis and its concomitant threats to the financial stability of economies around the world. Indonesia. The Basel III agenda was rounded off with a lecture about systemically important financial institutions around the globe and the new liquidity regime. Owing to the wide range of activities available for achieving an improved system of supervisory regulation, a banking supervisor from the operating unit of the Regional Office in Hesse gave a lecture about resolution proceedings in Germany. He spoke on the need to realise this regime and the broad experience gained in this field of supervision. The seminar also drew some important comparisons between crises in the past and current challenges with a view to generating a greater awareness of the crucial points in the exercise of banking supervision. The seminar s success was demonstrated by the exceptionally enthusiastic involvement of our guests in the form of lively and critical discussions with the experts and generous contributions. Financial stability systemic risk measurement Country: Albania Date: 17 20 June 2013 Venue: Central Office of the Deutsche Bundesbank Financial Stability Department: Charlotte Kimmel, Axel Löffler, Martin Ockler, Natalia Podlich, Jörg Seiler, Matthias Weiß Markets Department: Dr Rafael Zajonz Centre for Technical Central Bank Cooperation: Peter Spicka Number of participants: 6 In particular, the experts from the Deutsche Bundesbank s Central Office, most of whom are personally involved in the international negotiations at working group level, comprehensively discussed the definition of capital, capital conservation and the countercyclical buffer with the interested guests from the Bank of The bilateral activity focused on recent developments in the area of financial stability and macroprudential policy, with a special emphasis on systemic risk measurement.

Page 30 Following an overview of current developments in EU macroprudential supervision, the role of the Deutsche Bundesbank in assessing financial stability was presented. In this context, a concept for analysing systemic risk was introduced to the participants and a number of indicators for measuring systemic risk as well as possible designs such as surveillance risk maps were discussed. Moreover, a composite indicator of systemic stress in the European financial system was presented and discussed with the Albanian experts. This was supplemented by, an introduction to the implementation of the macroprudential mandate to a number of macroprudential policy tools. The small number of participants enabled an intensive dialogue on the respective topics with Deutsche Bundesbank key experts. The seminar provided experts from both institutions with a valuable insight into the work of each central bank.

Page 31 Activities abroad Financial stability issues Country: Ghana Date: 24 26 July 2012 Venue: Bank of Ghana, Accra Financial Stability Department: Frank Thiem Centre for Technical Central Bank Cooperation: Peter Spicka Number of participants: 26 An overview of the latest developments in the European Union with regard to micro and macro-prudential supervision was provided, along with a presentation of the organisational, structural and analytical framework of the Deutsche Bundesbank for dealing with financial stability issues. The context of macro and micro-prudential supervision was explained using the example of supervision of systemically important institutions in Germany. In an open discussion, the case of Ghana with regard to macro and micro-prudential supervision was analysed. Finally, special attention was given to the issue of restructuring and resolving financial institutions. Banking supervision and supervisory risk assessment Country: Georgia Date: 30 July - 3 August 2012 Venue: National Bank of Georgia, Tbilisi Regional Office in Bremen, Lower Saxony and Saxony- Anhalt: Henning Riediger Centre for Technical Central Bank Cooperation: Jörn Flegler Number of participants: 25 This seminar, with its focal point on the requirements and processes of the supervisory risk assessment, was held by two specialists from the Deutsche Bundesbank, one from the on-site side of supervision, the other representing the off-site team. Aimed at a complete and well functioning set-up within a banking supervisory authority, the Basel li accord makes a clear distinction between off-site reviews and on-site examinations. Therefore, it made sense to involve two speakers from these different sides of the operating units in banking supervision in the seminar to explain each approach and to share and discuss the associated benefits and downsides. Among the participants, there was a particularly high interest in the matter of supervisory rating, as the main result of the whole supervisory risk assessment process, in licensing and acquisition control matters, in the examination of banks credit procedures and in the interplay of off-site and on-site supervisors in the field of gaining information. As such, there was a strong wish to satisfy these expectations in the course of the seminar. An overview of the amendments made to Basel lii was also provided. Risk management, futures trading, stress testing and market reading Country: Philippines Date: 13 17 August 2012 Venue: Central Bank of the Philippines, Manila

Page 32 Risk Control Division: Dr Ralf Körner Centre for Technical Central Bank Cooperation: Dr Thomas Goswin Number of participants: 25 The Central Bank of the Philippines is currently faced with the need to develop a regulation to protect against potential risks arising from financial investments. Credit derivatives, in particular, have started to become rather popular among commercial banks, making it necessary to strengthen supervision processes and activities. Thus the focus of the seminar was on the definition, description and evaluation of complex financial instruments and the implication of this on banking supervision by the country s central bank. A set of appropriate models for pricing and risk evaluation was developed, taking into account the strengths and weaknesses evident in the Philippine banking sector. Financial stability reports Country: Russia Date: 3 7 September 2012 Venue: Central Bank of the Russian Federation, Moscow Centre for Technical Central Bank Cooperation: Sonja Juko, Peter Spicka Number of participants: 23 The seminar provided a comprehensive overview of international developments in the area of financial stability, systemic risk and macroprudential policy. The institutional framework for macroprudential supervision in the European Union, including the work of the European Systemic Risk Board, as well as conceptual issues and analytical tools for analysing financial stability were presented. The experience of the Deutsche Bundesbank in organising its financial stability function as well as the current discussion in Germany on how to implement a macroprudential mandate for central banks were reflected. Experts from both the Deutsche Bundesbank and the Bank of Russia provided an assessment of the stability situation in their countries. On the basis of a survey by the IMF, the development of the role of financial stability reports in recent years was analysed. Objectives, coverage, data issues and analytical tools as well as the structure of financial stability reports of a number of countries were compared with each other to provide an overview of best practices. Maintenance of short-term liquidity Country: Tajikistan Date: 17 21 September 2012 Venue: National Bank of Tajikistan, Dushanbe Senior Adviser for Financial Markets: Siegbert Eschenbacher Centre for Technical Central Bank Cooperation: Dr Thomas Goswin Number of participants: 20 The banking sector of Tajikistan is characterised by the absence of a secondary market for financial instruments as well as an interbank market. For the time being, the central bank has to accept the role of a lender of last resort obliged to provide liquidity to commercial banks. However, appropriate collateral for liquidity facilitation is not always available in the appropriate amount. The aim of the seminar was to develop alternative sources of liquidity and collateral, customised for the current situation on the Tajik market. It was agreed that consecutive consultations on this issue will be conducted in the course of 2013.

Page 33 Collateral valuation Country: Macedonia Date: 8 9 October 2012 Venue: National Bank of the Republic of Macedonia, Skopje Risk Control Division: Dr Ralf Körner Markets Department: Martin Treinies Number of participants: 11 Payments and securities settlement systems Country: Serbia Date: 15 19 October 2012 Venue: National Bank of Serbia, Belgrade Payments and Settlement Systems Department: Christine Stein, Andreas Werchan Number of participants: 31 Currently, many central banks are confronted with the ambitious task of fair valuation of assets which are not actively traded. As state-of-the-art valuation models employed to solve this task are critically dependent on timely and sound market data, central banks are left with a considerable risk of misevaluation when such data input is not available, especially in the current times of particularly tense market conditions. In addition, a possible measure to mitigate the related risks is the application of risk control measures such as haircuts or valuation markdowns. Calibrating such risk control measures, however, often leads to the same problems of missing or low-quality market data, as models employed for this task depend on market data input similar to that used for the valuation itself. The central bank of Macedonia is working on these issues inter alia in the field of collateral valuation for monetary policy operations. Although this central bank is rather small and new in this business, it can already rely on highly skilled professionals who appear to be able to solve the aforementioned tasks to a large extent by themselves. Thus, as in the past, the cooperation with the experts of the National Bank of the Republic of Macedonia (NBRM) proved to be very challenging but also fruitful for both sides. The objective of the seminar was to familiarise the participants from the National Bank of Serbia with the payment and securities settlement landscape in Europe, focusing on the TARGET2 system, the TARGET2-Securities (T2S) project and the SEPA initiative. The seminar started on the first day with a general overview of the European payments landscape followed by some in-depth presentations on functionalities, services, legal and organisational aspects of TARGET2 as the largevalue payment-system of the Eurosystem. The second day of the seminar was fully devoted to the ongoing T2S project which is aimed at creating a new securities settlement platform for Europe. The presentations covered a range of aspects including a general overview, the programme plan, governance and financials. In addition the participants were actively involved in a challenging group exercise giving them the opportunity to contribute their knowledge and ideas. The future functionalities of T2S were presented at the beginning of the third day, followed by some information on the future interaction of TARGET2 and T2S. The seminar concluded with a presentation on the initiative to create the Single Euro Payments Area (SEPA). The very well organised seminar took place in a very open and constructive atmosphere, leaving plenty of room for discussions and the exchange of ideas.

Page 34 Securities settlement systems Country: Indonesia Date: 5 9 November 2012 Venue: Bank of Indonesia, Jakarta Speaker: Payments and Settlement Systems Department: Steffen Bruns, Waltraud Wende Number of participants: 24 The objective of the seminar was to familiarise the participants from the Bank of Indonesia with the securities settlement landscape in Europe, to compare the status quo in Indonesia and Europe with regard to securities settlement infrastructures and to discuss approaches and experience in specific policy areas. The legal framework in Germany and national peculiarities were illuminated as well as their influence on monetary policy implementation. The role of the Deutsche Bundesbank in securities settlement systems was also discussed in depth. Regarding infrastructures, particular attention was given to CCPs, CSDs and TAR- GET2-Securities. Further focal points of the seminar were the oversight principles for securities settlement systems and the business continuity plans for national as well as European infrastructures. Controlling Country: Kenya Date: 6 8 November 2012 Venue: Kenya School of Monetary Studies, Mombasa Speaker: Centre for Technical Central Bank Cooperation: Christoph Stute Number of participants: 15 The seminar was organised and hosted by the Kenya School of Monetary Studies (KSMS). The seminar focused on the different topics of controlling. The main objective of this seminar was to enable a general exchange of knowledge about practical experiences in planning and controlling. The participants were highly interested in receiving detailed information about the different strategic and operational planning processes at the Bundesbank as well as gaining a better understanding of the general idea of organisational analysis and HR-management in central banks. External audit assessment On-site consultancy Country: Kyrgyzstan Dates: 19 29 November 2012 19 26 March 2013 16 26 April 2013 25 June 2 July 2013 Venue: National Bank of the Kyrgyz Republic, Bishkek Speaker: Senior Adviser for Internal Audit: Werner Ehlers Number of participants: varies Four on-site consultancies were carried out during the reporting period. The first aim was to assess whether the internal audit activities conformed with the standards of the Institute of Internal Auditors. International standards for the professional practice of internal auditing were discussed. The second aim was to evaluate the efficiency and effectiveness of internal audit activities in achieving set targets. There are plans to continue the consultancies.

Page 35 Financial stability Country: Azerbaijan Date: 26 30 November 2012 Venue: Central Bank of Azerbaijan Republic, Baku Financial Stability Department: Corinna Knobloch Centre for Technical Central Bank Cooperation: Peter Spicka Number of participants: 29 The seminar provided an overview of the latest developments in the European Union with regard to micro and macro-prudential supervision. The proposal of a banking union in the EU was also discussed and the organisational set-up and current work of the European Systemic Risk Board were introduced. Speaker: Centre for Technical Central Bank Cooperation: Dr Thomas Goswin Number of participants: 25 The banking sector of the Ukraine is currently undergoing a process of modernisation and alignment with west European markets. An increasing number of local banks within the Ukraine are subject to direct investment emanating from west European commercial banks. As a consequence, a totally new set of financial instruments is finding its way into the Ukrainian market. This process needs to be accompanied and supervised by the National Bank of Ukraine as the standard-setter for the Ukrainian market. The purpose of the seminar was to provide an overview of the definition, functioning and risk structure of modern financial instruments, and to develop appropriate models for risk evaluation. Aspects of the implementation of the macroprudential mandate in Germany and possible lessons for Azerbaijan were discussed and the organisational, structural and analytical framework of the Deutsche Bundesbank for dealing with financial stability issues was highlighted. A key focus of the seminar was how emerging market economies are analysed at the Bundesbank. The colleagues of the central bank of Azerbaijan were given an opportunity to apply their knowledge in a case study relating to financial stability indicators, macro stress testing and capital flows. Cash management Workshop Country: Israel Date: 3 6 December 2012 Venue: Bank of Israel, Jerusalem Cash Department: Thomas Langer Centre for Technical Central Bank Cooperation: Jens Fuhrmann Number of participants: 8 Derivative financial instruments Country: Ukraine Date: 27 29 November 2012 Venue: National Bank of Ukraine, Kiev Following on from a visit by three experts from the Israeli central bank to attend a seminar on the Bundesbank s cash management system at the beginning of 2012, the Bundesbank s experts were in turn able to visit the Bank of Israel for this event at the end of the year. The Bank of Israel (BOI) gave the two Bundesbank representatives a comprehensive insight into its cash management operations during their stay. In ad-

Page 36 dition to discussing the best possible manner in which to organise cash processing procedures and the current counterfeiting situation, attention was also paid to evaluating the future role of the BOI with regard to cash processing. In connection with this discussion, the participants were taken to visit a major cash-intransit company in Tel Aviv, where they were able to gain a good overview of the operational activities of this cash handler. At the end of the visit, the BOI stressed the importance of the Bundesbank experts visit to its home premises. Everybody agreed that the two visits constituted a sound basis for continued cooperation between the two central banks. Operational risk management and quality management at the Deutsche Bundesbank Country: Montenegro Date: 3 7 December 2012 Venue: Central Bank of Montenegro, Podgorica Speaker: Centre for Technical Central Bank Cooperation: Christoph Stute Number of participants: 10 Because operational risk management is of the utmost importance to central banks, an exchange of experience took place on this topic in Podgorica. In addition to the basic framework of operational risk management, the seminar addressed other important aspects, including quality management, crisis management, business continuity management and project management. The participants keen interest and numerous contributions provided the basis for lively discussions but also made the course a uniquely valuable exchange of knowledge and experience. 7th bilateral meeting financial stability Visit Country: South Korea Date: 17 18 December 2012 Venue: Bank of Korea, Seoul Financial Stability Department: Robert Unger Centre for Technical Central Bank Cooperation: Sonja Juko Number of participants: 10 The seventh bilateral meeting between the Bank of Korea and the Deutsche Bundesbank was organised at the former s request. The agenda contained two equally important and closely related topics: the state of public finances and policy responses to the sovereign debt crisis. With regard to the first topic, discussions focused on the developments and causes of the sovereign debt crisis as well as the more general question of debt sustainability in industrialised countries. The presentations on the second issue dealt with institutional changes in Europe and in a separate section concentrated on the monetary policy responses to the crisis. Each session consisted of a presentation by a delegate from each of the two institutions, followed by a discussion. Systemic risks and their global regulatory challenges Workshop Country: China Date: 24 25 January 2013 Venue: German Embassy and Delegation of the European Union to China in Beijing Speaker: Centre for Technical Central Bank Cooperation: Dr Martin Pontzen Number of participants: 70

Page 37 The aim of the workshop, which was organised by the Economic Department of the Embassy of the Federal Republic of Germany, was to give a very mixed audience the opportunity to describe the impact of the current financial crisis on the regulatory institutions. The workshop illustrated the context of financial stability, systemic risk and macroprudential policy. The development of macroprudential oversight in the EU was outlined and key aspects of the financial stability analysis of the Deutsche Bundesbank were highlighted. Monetary policy management Country: Thailand Date: 5 7 February 2013 Venue: Bank of Thailand, Bangkok Economics Department: Ute Volz Centre for Technical Central Bank Cooperation: Sonja Juko Number of participants: 10 The focus of the seminar was on two aspects. First, strategic issues in the area of monetary policy and second, specifically analytical issues relating to the analysis of monetary developments. Participants were introduced to the two-pillar strategy of the Eurosystem. In a case study, they had the opportunity to obtain practical insights into the analytical framework which forms the basis of monetary policy decisions in the euro area. The remaining sessions dealt with monetary analysis. Presentations on the role and the content of monetary analysis at the Bank of Thailand and the Deutsche Bundesbank were followed by a computer exercise. Illustrations of the use of bank lending survey data and inflation expectations provided further material for discussion on ways to improve monetary analysis for monetary policy purposes. Cash centre On-site consultancy Country: Kyrgyzstan Date: 11 15 February 2013 Venue: National Bank of the Kyrgyz Republic, Bishkek Administration and Premises Department: Andreas Diekmann Centre for Technical Central Bank Cooperation: Jens Fuhrmann Number of participants: varies For several years now, the National Bank of the Kyrgyz Republic (NBKR) has been planning a new location for the secure storage of its money holdings in the city of Bishkek. Working together with the Swiss National Bank (SNB), the TCBC began on this project back in 2012 and has continued to assist the NBKR since then in its efforts to find a suitable location for building a new storage facility. In the intervening period, different teams of negotiators held a number of talks with the NBKR management with a view to eliciting a final decision. Having examined the various options on offer, the NBKR decided in favour of building the facility on a greenfield site. Earlier this year, a suitable new location was identified and the relevant preparations are now underway to get the construction project moving. The collaborative input of the Bundesbank and the SNB into this concrete project bears the hallmark of success as both sides have benefited from one another s individual expertise, which has added special weight to on-site recommendations.

Page 38 Organising, designing, developing and controlling new central bank functions in the area of macroprudential policy and financial stability surveillance Country: Indonesia Date: 19 21 February 2013 Venue: Bank Indonesia, Denpasar Centre for Technical Central Bank Cooperation: Peter Spicka, Christoph Stute Number of participants: 25 Indonesia recently established its own Financial Services Authority (Otoritas Jasa Keuangan OJK ), which will be responsible for supervising, regulating, examining and investigating the financial services sector in Indonesia. As a result, the Bank of Indonesia will become responsible for macroprudential regulation. The seminar focused on how to design and facilitate this major restructuring process with the greatest efficiency and how best to organise the responsibilities to be taken on by the Bank of Indonesia. An overview of international developments regarding creation of a macroprudential framework, was followed by a description of the Bundesbank s own experience in the area of financial stability. The road to implementation of the macroprudential mandate in Germany was presented as an example of how to design the link between micro and macroprudential supervision. From an organisational perspective, an explanation was given of how to structure the new department/divisions and the form which a job assessment in this context might take. The seminar enabled experts from both institutions to engage in a fruitful exchange of views and knowledge concerning recent developments in the area of financial system stability and macroprudential policy. Basel II and Basel III, requirements for implementation and sound practice Country: Kazakhstan Date: 3 5 April 2013 Venue: National Bank of Kazakhstan, Almaty Speaker: Centre for Technical Central Bank Cooperation: Jörn Flegler Number of participants: 12 The seminar was designed as an intermediate-level introduction to the latest and most significant developments concerning the global banking supervisory framework. The agenda of the seminar was chiefly focused on responses to the crisis in the form of already realised and pending regulatory projects in the area of banking supervision, depositors protection and banking resolution proceedings. The course began with an overview of the very many supervisory responses to the financial crisis. Modernday supervisory approaches attach great importance to adherence to the internal capital concepts stipulated in Basel II s Pillar II framework. The differentiation made between the regulatory and the aforementioned internal capital minimum requirements in terms of different targets, different purposes and different sanctions in case of a shortfall were fully emphasised, thus meeting the expectations of the participants. The methodology and practice of the supervisory rating as a well established and effective early warning system was comprehensively treated and discussed.

Page 39 The seminar was rounded off by an interesting discussion about enforcement and theory and practice in both jurisdictions as well as an overview of Basel III. Construction of a new cash centre On-site consultancy Country: Botswana Date: 4 12 April 2013 Venue: Bank of Botswana, Gaborone Administration and Premises Department: Andreas Diekmann Centre for Technical Central Bank Cooperation: Jens Fuhrmann Number of participants: varies In 2007 the first contacts were established between the TCBC and the Bank of Botswana (BOB) as part of the Partnership with Africa programme initiated by Horst Köhler, the former German President. The secondment of a permanent Bundesbank representative as a central banking advisor to the BOB for a period of two years raised the question as to what modern role the BOB wants to play in the national cash cycle. In this regard, the BOB attached great importance to achieving its targets of security, efficiency and transparency. A modern building was constructed on a plot measuring approximately 10,000 m² that meets all current security and functionality standards. Over and above this, it represents a landmark building that reflects the progress of this prospering nation. The building was constructed in a record time of two years and with a budget of EUR 30 million. It contains a vault measuring around 1,200 m² and modern cash processing equipment including two fully automated machines and a semi-automated storage and portioning system. The BOB has set new standards in installing what is known as a buffer vault, which is used for the daily storage of the processed cash and to prepare the cash for withdrawal. This means that the main vault needs to be opened much less frequently in the course of a single month. As regards the in-built security technology, this aspect is writ large and we can be especially proud of the fact that parts of the vault bear the stamp made in Germany. Contagion and network analysis Country: Uganda Date: 15 20 April 2013 Venue: Bank of Uganda, Kampala Speaker: Bundesbank Research Centre: Co-Pierre Georg Number of participants: 15 With this in mind, the BOB contacted the TCBC five years ago and asked for its assistance in building a new, state-of-the-art cash centre. Since that date, there has been a lively exchange of ideas between the BOB and the Bundesbank, resulting in the completion of the current building which has been in operation as the Bank of Botswana s cash centre since April of this year. This specialised course on contagion and network analysis comprised a number of lectures including an introduction to financial networks from both the methodological as well as the empirical perspective. Special emphasis was placed on the analysis of financial networks in developing and emerging economies. The methodological side consisted of an introductory part in which participants were familiarised with the basic notions of network theory. Since some of the

Page 40 participants already had some knowledge about financial networks, the course also covered several more advanced topics including novel measurement methodologies to assess liquidity stress. Finally, a session on agent-based modelling highlighted how financial network analysis can be combined with systemic risk analysis. In the section concerning technical assistance, two objectives were achieved. First, the Bank of Uganda s framework for financial stress testing was extended to include a contagion analysis using interbank network and balance sheet information available at the Bank of Uganda. And second, the network visualisation and analysis tool developed within the Research Centre of the Deutsche Bundesbank was applied to the Ugandan interbank market. This allowed researchers from the Bank of Uganda to supplement their existing liquidity monitoring toolkit. In a closing seminar, the results were presented to the management. In a hands-on tutorial session, the developed code was installed on the computers of researchers at the Bank of Uganda and mechanisms were put in place to ensure that they can continue developing the tool. Financial stability Country: Thailand Date: 17 19 April 2013 Venue: Bank of Thailand, Bangkok Banking and Financial Supervision Department: Marc Mitrovic Centre for Technical Central Bank Cooperation: Peter Spicka Number of participants: 50 Following an overview of the latest developments in the European Union with regard to micro and macroprudential supervision, the organisational set-up as well as the current work of the European Systemic Risk Board were introduced. The implementation of the macroprudential mandate in Germany and possible lessons for Thailand were discussed, after which the organisational, structural and analytical framework of the Deutsche Bundesbank for dealing with financial stability issues was presented. Special attention was given to the analysis of housing markets. The seminar was complemented by a presentation on the various stress testing approaches that are available and their role in guaranteeing a sound financial stability analysis. Contemporary problems of financial markets development Country: Russia Date: 13 18 May 2013 Venue: Central Bank of Russian Federation, St Petersburg Parties involved: Deutsche Bundesbank University of Applied Sciences: Prof Dr Dr (hc) Erich Keller, Christof Wolf Number of participants: 20 Russian students, 20 German students As part of the cooperative arrangement between the University of the Bundesbank and Russian banking schools (see also the July activity detailed on page 22), in May 2013 a seminar was held in St Petersburg focusing on Contemporary problems of financial markets development. With the assistance of Viktor Khalanskij, Director of the St Petersburg Banking School and Marina Ignatieva, Deputy Director of the Moscow Banking School, students from both these schools had the chance to attend academic lectures by

Page 41 professors from a number of St Petersburg universities dealing with topical issues facing the Russian banking and insurance sector. Furthermore, Nadezhda Savinskaya, Head of the Bank of Russia Regional Branch for St Petersburg and a member of the central bank s Board of Directors, arranged a visit to see the bank s ultra-modern cash centre, combined with a set of lectures devoted to the subjects of cash logistics and cash management at the Bank of Russia. The next event falling under the cooperative framework is scheduled to take place in November 2013 at the University of the Deutsche Bundesbank in Hachenburg. TARGET2 queueing, liquidity management, monitoring and analysis Country: Armenia Date: 17 21 June 2013 Venue: Central Bank of Armenia, Yerevan Payments and Settlement Systems Department: Andreas Kick, Andreas Werchan Number of participants: 20 Monetary analysis in a central bank Country: Russia Date: 20 24 Mai 2013 Venue: Training and education centre of the Russian Central Bank in Tula, Russia Financial Stability Department: Dr Markus Schmidt Centre for Technical Central Bank Cooperation: Dr Martin Pontzen Number of participants: 22 The seminar provided the participants with a lot of details about the monetary policy instruments of the European Monetary System. The speakers outlined the Bundesbank s stance on the current developments, and risks for the stability of a currency were discussed in detail. The Central Bank of Armenia is currently considering improvements to its RTGS system (eg implementing liquidity-saving features) as well as the introduction of a data warehouse solution for the payments system to enhance the monitoring and analysis of payments data. The seminar was focused on liquidity management, business monitoring and risk analysis in TARGET2. After an introduction to the RTGS system, which provided the participants with a general overview of the functionalities, the European payment landscape in general was explained. This was followed by a detailed discussion of the liquidity management features of TARGET2 with the attending payment system specialists who showed a particular interest in the concept of limits. Subsequently, the different monitoring and analytical possibilities via ICM, CRSS and the T2 Simulator were presented. The use and content of predefined and tailor-made reports for evaluating risks and the efficiency of the payment system led to some fruitful discussions. The seminar ended with a presentation on the operational aspects of TARGET2, explaining the role and responsibilities of the Operational Team members located in Rome and Frankfurt.

Page 42 Joint activities with other institutions Joint seminar with the International Banking and Finance Institute (IBFI), Banque de France The Governor of Banque de France established the International Banking and Finance Institute (IBFI) in 1997. The IBFI s task is to organise seminars for foreign central banks in all areas of central banking and banking supervision and to foster the exchange of experience between them. things off, a workshop on the subject of Well-being at work was held. It transpired that the participants had varying perceptions of the term well-being. Human Resources, Management and Training Date: 10 14 September 2012 Venue: International Banking and Finance Institute (IBFI), Marne la Vallée Human Resources Department: Annika Bär, Carola Lache Number of participants: 30 For years now, Banque de France and the Bundesbank have jointly organised the TCBC seminar Human Resources, Management and Training. The purpose of this seminar is to exchange information on standards and trends in the field of human resources work. This year, the focus of the presentations held by the two Bundesbank representatives was on the Bundesbank s HR strategy and objectives and on activities designed to motivate employees as well as education and training. The lively discussions that followed the presentations were particularly interesting. The presentations by Banque de France and other participants (eg from Bahrain, South Korea, Montenegro) provided a lot of stimulating input and innovative ideas. To round

Page 43 Joint seminar with South East Asian Central Banks (SEACEN) Research and Training Centre The South East Asian Central Banks (SEACEN) Research and Training Centre reviews and analyses financial, monetary, banking and economic developments in its constituent member countries and in the Asian region as a whole and offers training focusing on areas that have practical applications in central banking. System stress testing Date: 28 January 1 February 2013 Venue: Monetary Authority of Singapore (MAS), Singapore Banking and Financial Supervision Department: Dr Philipp Koziol Centre for Technical Central Bank Cooperation: Jörn Flegler Number of participants: 20 work. With respect to macro-prudential supervision, stress tests constitute the most important supervisory tool for appraising the resilience of the banking sector and detecting vulnerabilities within the sector. For both of these areas of supervision, the seminar showed the working methods used by the Deutsche Bundesbank for stress testing, as well as the various approaches available and the resulting requirements and duties for the supervisors themselves. Internationally, there continues to be a large demand for this seminar which covers a highly important area of activity in an effectively operating banking supervision environment. The content and the aims of this seminar were broadly similar to those of the stress testing seminars held in preceding years and also hosted by the central banks belonging to the SEACEN group. Some minor topicrelated adjustments and up-dates made necessary by the rapid evolution of banking supervision and some didactical improvements were incorporated into the existing syllabus. Within the domain of micro-prudential supervision, stress testing represents an integral part of banks or groups own risk management and the efforts of supervisors to complement the looking-forward approach anchored in Pillar II of the Basel II convergence frame-

Page 44 Joint seminar with the Central Bank of West African States (BCEAO) The BCEAO is the central bank of the West African countries Benin, Burkina Faso, Côte d Ivoire, Guinea- Bissau, Mali, Niger, Senegal and Togo. These countries form the West African Economic and Monetary Union (UEMOA). Banking system, capital markets and financial stability Throughout the course, but in particular during the case study section devoted to preparing a risk map analysing each country s individual risk exposure in their banking sector, the participants showed a high degree of enthusiasm and an exceptional understanding of the complex and complicated methodology underlying risk management activities. As expected, and to everyone s satisfaction, all of the participants passed the exam on the final day of the seminar. Indeed some individuals achieved remarkably good results, despite the at times challenging and wide-ranging nature of the questions. Date: 14 18 January 2013 Venue: BCEAO Dakar, Sénégal Regional Office in Rhineland-Palatinate and Saarland: Achim Altschäffl Centre for Technical Central Bank Cooperation: Jörn Flegler Number of participants: 37 The syllabus of this seminar covering banking supervision, capital markets and financial stability constituted one element of the in-house education programme offered to the central bank staff of BCEAO countries. Two Bundesbank experts were responsible for this part of the education programme. The course basically combined an analysis of the views of the banks regarding two of their most important risk drivers interest rate risk and credit risk with discussion of the resulting supervisory treatment of these risks. The sound appraisal and management of credit and interest rate risk within the supervised banks was a key topic of the seminar, however attention was also given to the main supervisory requirements laid down in the Basel II and III regimes which were duly explained, meaning that supervisory expectations in these risk areas were also covered.

Page 45 Joint executive seminar with diplomats from the western Balkans, conducted by the German Foreign Office The institutional framework of the Eurosystem Date: 6 May 2013 Venue: Regional Office in Hesse, Frankfurt Speaker: Centre for Technical Central Bank Cooperation: Jörn Flegler Number of participants: 18 The seminar took place on the initiative of the German Foreign Office, with the general aim of explaining the institutional framework of the Eurosystem, with a particular emphasis on the role of the European Central Bank and of the Deutsche Bundesbank as Germany s national central bank. In light of the persisting economic challenges evident in the euro area and in several other advanced economies, it was out of the question to confine the presentation solely to institutional matters relating to central banking in Europe. The speaker and the participants swiftly entered into a lively discussion about political, economic and social integration in Europe. There was general agreement on the key principles underlying European integration, ie to ensure peace, freedom and prosperity in Europe. All the participants recognised that integration of the west Balkan states seeking accession to Europe is inextricably tied to the transfer of these principles and a welcome development as the benefits for the region and its citizens greatly outweigh the risks. Joint seminar with the West African Monetary Institute (WAMI) The West African Monetary Institute (WAMI) was established by the five West African states of Gambia, Ghana, Guinea, Nigeria and Sierra Leone in December 2000, with the primary mandate to undertake policy and technical preparation for the launch of a monetary union for the West African Monetary Zone (WAMZ) and the establishment of a West African Central Bank (WACB) as well as a common currency the Eco. Liberia became the sixth member of the WAMZ in 2010. Experience with currency unions Date: 5 June 2013 Venue: ECB and Money Museum of Deutsche Bundesbank, Frankfurt Centre for Technical Central Bank Cooperation: Jörn Flegler, Dr Martin Pontzen Number of participants: 17 Three topics were the focus of the function of national central banks in the Eurosystem, banking supervision and the historical experience. The preservation of the function of individual national central banks within a monetary union of independent states was an important topic of discussion. The relationship between a central bank and the finance ministry was discussed in detail at the request of the participants. The German historical experience in the field of currency unions formed the conclusion of the delegation s visit.

Page 46 Joint seminar with the Center for Latin American Monetary Studies (CEMLA) The main objective of the Center for Latin American Monetary Studies (CEMLA) is to promote a better understanding of monetary and banking matters in Latin America and the Caribbean, as well as the relevant aspects of fiscal and exchange rate policies. In 2012, Deutsche Bundesbank and the CEMLA signed a joint Memorandum of Understanding as a formal basis for the cooperation. Banking supervision Date: 11 13 December 2012 Venue: CEMLA, Mexico City Speaker: Centre for Technical Central Bank Cooperation: Jörn Flegler Number of participants: 25 The seminar aimed to set out how supervisors can deal with the ever increasing integration of the international banking sector. In both advanced and developing and emerging economies, this process of integration is likely to lead to a higher domestic market share of foreign banks with subsidiaries and branches in these countries. In terms of economies of scale, a high level of intra-group receivables, often caused by a centralised treasury unit, is typical for a globally operating group. The speaker presented the supervisory mechanism designed to restrict these up-stream loans and highlighted its consequences with regard to the supervisory expectations of the group s economic capital concepts. Subsequently, and indeed for the duration of the seminar, these topics served as the basis for an interesting discussion by the participants. Human resources management Date: 15 17 Mai 2013 Venue: Central Bank of Venezuela, Caracas Human Resources Department: Frank Elster Centre for Technical Central Bank Cooperation: Martin Dinkelborg Number of participants: 35 Representatives from a total of 15 CEMLA member states took part in this seminar covering a broad spectrum of HR-related and staff management subjects. The seminar, which was divided up into separate presentations and discussion rounds, applied the Bundesbank s experience in identifying strategic challenges and implementing new staff management instruments to address issues being faced by the participating institutions, thus helping to find ways to overcome the problems in question. For this reason, host supervisors and the host banking sector find themselves bearing the risk of high intragroup, cross-border loans, known as up-stream loans. In the event of a collapse of the group, this exposure is likely to be at great risk. In Germany, this special kind of concentration risk left an impressive mark when the German subsidiary of the Lehmangroup crashed.

Page 47 Projects with third-party funding The Bundesbank is committed to supporting the European Neighbourhood Policy (ENP) of the European Union (EU) which is aimed at deepening the political and economic relations with neighbours of the EU. The ENP represents a broad political strategy with the ambitious objective of strengthening the prosperity, stability and security of Europe s neighbourhood. Socalled twinning projects are funded by the European Commission and are designed to support beneficiary countries in their development of modern and efficient administrations, including their central banking apparatus. In 2007, the EU extended this instrument beyond the group of actual and potential candidate countries to include the countries participating in the European Neighbourhood and Partnership Instrument (ENPI). The European Neighbourhood Policy was developed in 2004 with the objective of avoiding the emergence of new dividing lines between the enlarged EU and its neighbouring countries. Instead, the emphasis was to be on strengthening the prosperity, stability and security of these countries. The aim of all twinning activities remains the same: to support beneficiary countries in the development of modern and efficient administrations, with the structures, human resources and management skills needed to implement the acquis communautaire to the same standards as EU member states and to create a close partnership of authorities. The Bundesbank has been participating in these projects since 2004 and continues to expand its active involvement, promoting close partnerships with beneficiary central banks. Furthermore, and in collaboration with other central banks belonging to the European System of Central Banks (ESCB), the Bundesbank also contributes to ESCB projects that are coordinated by the European Central Bank (ECB) and financed by the EU.

Page 48 EU Twinning Projects Capacity Development of Human Resources in the National Bank of Serbia Duration: 21 November 2012 20 June 2013 Beneficiary institution: National Bank of Serbia National central banks involved: Deutsche Bundesbank (project leader), Czech National Bank (junior project partner) Bundesbank experts: Human Resources Department: Dr Elmar Döhler, Frank Elster, Alexander Faber, Stefanie Reich, Katrin Schilling Regional Office in North Rhine-Westphalia: Barbara Hönecke Regional Office in Bavaria: Sarah Witzl Regional Office in Bremen, Lower Saxony and Saxony- Anhalt: Bettina Gechter Regional Office in Baden-Württemberg: Sandra Kettler, Karin Mergenthaler Freiburg branch: Birgit Schmedding Regional Office in Saxony and Thuringia: Torsten Mertel Project manager: Centre for Technical Central Bank Cooperation: Martin Dinkelborg human resources management strategy, recruitment and employment, staff training, staff career management and software infrastructure for the needs of Human Resources. Altogether, the implementation period lasted 150 working days. A closing conference in Belgrade on 13 June 2013 marked the end of the twinning light project, by which time all the mandatory results had been achieved. The project partners committed themselves to continuing this fruitful and successful cooperation in the future. During the reporting period, the Deutsche Bundesbank together with the Czech National Bank successfully conducted a twinning light project for the benefit of the National Bank of Serbia. The project entitled Capacity Development of Human Resources in the National Bank of Serbia was launched on 27 November 2012 with an opening conference held in Serbia. Over a period of seven months, HR experts from the Deutsche Bundesbank and the Czech National Bank provided advice to their Serbian colleagues concerning

Page 49 Joint Projects within the ESCB Strengthening the institutional capacities of the National Bank of Serbia Duration: 1 February 2011 31 January 2013 Beneficiary institution: National Bank of Serbia National central banks involved: Nationale Bank van België/Banque Nationale de Belgique, Българска народна банка (Bulgarian National Bank), Česká narodní banka, Deutsche Bundesbank, Eesti Pank, Central Bank of Ireland, Bank of Greece, Banco de España, Banque de France, Central Bank of Cyprus, Banque centrale du Luxembourg, Magyar Nemzeti Bank, Nederlandsche Bank, Oesterreichische Nationalbank, Narodowy Bank Polski, Banco de Portugal, Banca Naţională a României, Banka Slovenije, Národná banka Slovenska, Suomen Pankki Finlands Bank and Bank of England Bundesbank experts: Regional Office in Bavaria: Manfred Aurbach, Alexander Ruiz-Höhn Regional Office in Saxony and Thuringia: Sebastian Möckel Project manager: Centre for Technical Central Bank Cooperation: Martin Dinkelborg Experts from the banking supervision teams of the regional offices in Bavaria and Saxony and Thuringia continued to contribute their skills and expertise to the project Strengthening the institutional capacities of the National Bank of Serbia, which was launched in February 2011. While the project was extended to continue until the end of December 2013, the Deutsche Bundesbank concluded its involvement on the previous end date in January 2013 as all the mandatory results had already been achieved. Review of legal, organisational and resource requirements for the National Bank in the process of European Central Bank (ECB) and European System of Central Banks (ESCB) accession Duration: 15 October 2012 15 July 2013 Beneficiary institution: National Bank of the Republic of Macedonia National central banks involved: Българска народна банка (Bulgarian National Bank), Deutsche Bundesbank, Eesti Pank, Central Bank of Ireland, Banca d Italia, Banco de España, Bank Ċentrali ta Malta (Central Bank of Malta), Nederlandsche Bank, Oesterreichische Nationalbank, Banka Slovenije, Národná banka Slovenska Bundesbank expert: Centre for Technical Central Bank Cooperation: Jens Fuhrmann Project manager: Centre for Technical Central Bank Cooperation: Martin Dinkelborg At the end of 2012, the ECB launched the project entitled Review of legal, organisational and resource requirements for the National Bank in the process of European Central Bank (ECB) and European System of Central Banks (ESCB) accession for the benefit of the National Bank of the Republic of Macedonia (NBRM). Our expert for cash management and payment systems at the Centre for Technical Central Bank Cooperation was in charge of analysing the current status of the working area Banknotes, and ultimately provided his advice and recommendations for further improvements at the NBRM. The project was officially be completed on 10 July 2013 with a closing conference in Skopje.

Page 50 Overview in figures Ten countries participating most frequently in training and consultancy sessions in number of activities 30 Training in Germany 25 Training abroad Consultancy abroad 20 15 10 5 0 Russia Serbia Indonesia China Tajikistan Montenegro Ukraine Vietnam Belarus Kyrgyzstan Deutsche Bundesbank All activities by platform Projects with third-party funding (8%) International central banking courses (8%) Number of activities, 298 total Bilateral projects (84%) Deutsche Bundesbank

Page 51 Countries with the most participants at International Central Banking Courses (ICBC) * Number of participants 25 20 15 10 5 0 Russia Sri Lanka Kyrgyzstan Bangladesh Turkey Ukraine India Korea (South) Nepal Serbia Mongolia Ethiopia Kazakhstan Indonesia Bulgaria Cambodia Moldova Philippines * Almost half of all ICBC participants come from the 18 countries shown here. The other half are spread across a further 66 countries. Deutsche Bundesbank Training and consultancy sessions * Number of activities, 254 total Training abroad (31%) Consultancy abroad (11%) Training in Germany (58%) * In total, 3,093 people attended the training and consultancy sessions (1,220 attended those held in Germany and 1,873 those held abroad). Deutsche Bundesbank

Page 53 Outlook Next year, topics relating to the ongoing economic and financial crisis are once again expected to dominate the Deutsche Bundesbank s Technical Central Bank Cooperation activities. The focal point for foreign central banks is likely to be the struggle surrounding the euro and the resultant increased political integration in the euro area. In addition to political steps (eg setting up the Single Supervisory Mechanism, enhancing monetary policy analysis in the euro area), monetary authorities also have a number of technical innovations on their agenda (eg the launch of SEPA and improvements to cash recycling). The Deutsche Bundesbank will take these developments into account and adapt its range of activities accordingly in the coming year. Moreover, the Bundesbank is looking to consolidate its regionally integrative approach, especially in Latin America, Africa and South East Asia.

Page 54 About us The Centre for Technical Central Bank Cooperation s staff, who number almost 30, belong to the Central Office of the Deutsche Bundesbank in Frankfurt am Main. They are responsible for organising and imple- menting the wide range of activities that the Deutsche Bundesbank offers to central banks across the globe, under the aegis of the Bundesbank s technical central bank cooperation (TCBC) programme. Jürgen Sterlepper Director Martin Dinkelborg Deputy Director Deborah Martini Secretariat Natalia Mojaeva-Hähnlein Administration Venue As a rule, the TCBC training events offered in Germany are held on the Bundesbank s premises. This applies both to the training courses themselves and to the participants accommodation. Most of the activities in Germany take place in Frankfurt, where the Bundesbank s Central Office is located. The Centre for Technical Central Bank Cooperation draws not only on the facilities of the Bundesbank in Frankfurt, but also on those of its Regional Offices, the Deutsche Bundesbank University of Applied Sciences in Hachenburg in the Westerwald and its Conference Centre in Eltville on the Rhine. Deutsche Bundesbank University of Applied Sciences in Hachenburg, Westerwald region Conference Centre in Eltville, Rhine region

Page 55 Jörn Flegler Banking supervision and financial stability Peter Spicka Banking supervision and financial stability Jens Fuhrmann Cash management and payment systems Sonja Juko Monetary policy and financial markets Christoph Stute Auditing and controlling Dr Thomas Goswin Accounting Dr Martin Pontzen Consultant for central banking Joachim Schirmer Consultant for central banking Margaret Lemmen Advisers secretaries office Advisers The centre engages a number of advisers to cover the content of the individual projects. With their broad range of professional qualifications and skills, these advisers are able to cover a large area of the topics requested by our partner central banks. For more specialised issues or special seminar arrangements (eg workshops), the advisers design the programme in consultation with the Bundesbank specialists concerned, thus ensuring individually tailored solutions with optimal content. While general, fundamental problems formed the core of the agenda in the first few years of training, many partner central banks are now focusing increasingly on more specialised topics. There is, for example, a particular interest in the following subject areas: financial stability, banking supervision, cash management, foreign reserve management, monetary policy, human recourses management, good governance, internal auditing and payment and securities settlement systems.

Page 56 Christa Lampe Controlling, evaluation Silke Schrupp Public relations, reporting Daniel Januschka IT issues Angelika Ißlei Administration Cross-sectional tasks Cross-sectional tasks comprise a wide range of activities, from matters relating to organisation, budget and controlling to IT strategies, project-related research, evaluation and analyses through to public relations work, focusing in particular on the preparation of technical central bank cooperation publications and web presentations. International central banking courses The international central banking courses team is responsible for organising the courses, including managing the application procedure and planning social events. In close cooperation with the relevant advisers, members of the team ensure the courses are of the highest quality. Each year, the Centre for Technical Central Bank Cooperation publishes a brochure in English providing essential information about the programme for the following year and other interesting details of the international central banking courses. This brochure is available in electronic form on the internet (www.bundesbank.de/tzk/tzk_seminar_kontakt. en.php) but a paper copy can also be requested. Daniela Dörrer Project Manager Silke Frühklug Project Manager Martina Arnold Project Manager

Page 57 Claudia Brune Head of Section Andrea Mink Head of Section Jan Eckert Middle East, Central Asia, Caucasus, Turkey, Africa, Latin America Ralf Hannemann China, Tajikistan, Ukraine, new EU member states Irina Schatalow Russia, Belarus Sylvia Villwock Balkan states Beate Westerberg-Lutz South East Asia Bilateral projects The bilateral projects team coordinates and organises all activities tailored to individual requirements, ranging from specialist seminars in Germany to appropriate events or direct consultancy services abroad. for a specific group of countries. Besides taking care of all organisational tasks, the project manager also ensures the guests have a pleasant time in Germany during the course of their seminar or visit. To promote smooth cooperation with our contacts around the world, each project manager is responsible Their continuous contact with everyone involved in the project guarantees each project s success.

Page 58 Dr Martine Niederkorn Head of Section Patrick Kauk Administration and project management Birgit Engelmann Treasury management Projects with third-party funding The management of third-party funded projects differs slightly from that of other central bank cooperation activities. A large number of agents from the Bundesbank itself, from the beneficiary institution, from partner institutions and from the provider of funds are usually involved in such projects. The team members prepare the projects and coordinate the activities of running projects with all parties involved. Moreover, they ensure the efficient use of funds in line with the framework set up by the provider of the funds and take care of the necessary project documentation.

Page 59 TCBC publications The seminar brochure International Central Banking Courses 2014 presents all the courses on offer next year, together with the corresponding organisational information. The conference book gives an overview of the content of the international conference on 20 Years of Technical Central Bank Cooperation, which was held at the Deutsche Bundesbank s Conference Centre in Eltville from 27-29 October 2010. Furthermore, the book provides an in-depth look at 20 years of technical central bank cooperation from the perspective of the Deutsche Bundesbank and several partner central banks and associates. The TCBC flyer provides a brief overview of the services offered by the Centre for Technical Central Bank Cooperation. All TCBC publications are in English. Paper versions are available on request. The seminar brochure, the flyer and the annual report are available in electronic form at www.bundesbank.de/tzk/tzk.en.php. What we offer Related publications Bilateral projects In all aspects relating to the structure of the bilateral projects (ie subject matter, selected venue, participants, language to be used) we endeavour to fulfil the wishes and requirements expressed by the interested partner central banks. Annual publications in English the annual report, including figures and examples of the Centre s activities in the past business year a course brochure detailing the content and organisation of the international central banking courses on offer Centre for Technical Central Bank Cooperation International Central Banking Courses 2014 Possible formats: Specialist seminars held in Germany or in the partner country featuring tailor-made lectures, presentations or workshops for senior employees, specialists or junior staff members. (Duration usually three days. Held in English or the native language of the country in question, if translation is provided.) Project consultancy services in the partner country, providing support and assistance in executing concrete Contact details central bank tasks. Video conferences handling specific issues, lasting no longer If you have any questions regarding our activities than two to three hours. or would like to order one of our publications, we will be very glad to assist. Additional information OF TECHNICAL CENTRAL BANK COOPERATION can be found on our designated website: Third-party funded projects www.bundesbank.de/tzk/tzk.en.php Central Bank Expertise Explaining training developing Our invitation to all interested central banks and foreign monetary authorities The Bundesbank carries out third-party funded consultancy projects for foreign central banks, eg EU-financed partnership projects ( Twinning ) Joint projects with other ESCB central banks financed by the EU and coordinated by the ECB. Deutsche Bundesbank Centre for Technical Central Bank Cooperation Wilhelm-Epstein-Straße 14 60431 Frankfurt am Main Germany E-mail: tzk@bundesbank.de Tel: +49 (0)69 9566 6605 Fax: +49 (0)69 9566 50 9250 Centre for Technical Central Bank Cooperation OF TECHNICAL CENTRAL BANK COOPERATION OF TECHNICAL CENTRAL BANK COOPERATION

Page 60 List of abbreviations AMF ARIMA BaFin BOB BCEAO BOI CBA CEMLA CCP CRSS CSD Destatis DM ECB ENP ENPI ESCB ESM EU GfK HR IBFI Ifo IT ICM KSMS MAS MoU NAC NBKR Arab Monetary Fund Autoregressive Integrated Moving Average Bundesanstalt für Finanzdienstleitungsaufsicht Bank of Botswana Central Bank of West African States Bank of Israel Central Bank of Armenia Center for Latin American Monetary Studies Central Counterparty Customer Related Services System Central Securities Depository Statistisches Bundesamt Deutsche Mark European Central Bank European Neighbourhood Policy European Neighbourhood and Partnership Instrument European System of Central Banks European Stability Mechanism European Union Gesellschaft für Konsumforschung Human Resources International Banking and Finance Institute Institut für Wirtschaftsforschung Information Technology Information and Control Module Kenya School of Monetary Studies Monetary Authority of Singapore Memorandum of Understanding National Analysis Centre National Bank of the Kyrgyz Republic

Page 61 NBRM OJK RTGS SEACEN SEPA SNB TARGET TCBC T2S UEMOA USD WAMI WAMZ WACB National Bank of the Republic of Macedonia Otoritas Jasa Keuangan Real Time Gross Settlement South East Asian Central Banks Research and Training Centre Single Euro Payments Area Swiss National Bank Trans-European Automated Real-time Gross Settlement Express Transfer System Technical Central Bank Cooperation TARGET2-Securities West African Economic and Monetary Union United States Dollar West African Monetary Institute West African Monetary Zone West African Central Bank

Page 62 Imprint Editorial planning Centre for Technical Central Bank Cooperation Photographs Antje Meichsner Stephan Müller Antje Gärtner Layout/DTP Mediadesign, Deutsche Bundesbank

Deutsche Bundesbank Centre for Technical Central Bank Cooperation Wilhelm-Epstein-Straße 14 60431 Frankfurt am Main, Germany E-mail: tzk@bundesbank.de Internet: www.bundesbank.de/tzk/tzk.en.php