Cairo:The Central Bank of Egypt (CBE) recently organized a comprehensive training program focused on 'Integrating Climate Risks into Microprudential and Macroprudential Stress Testing for Central Banks.' This initiative saw participation from 25 representatives across 11 central banks, all members of the Common Market for Eastern and Southern Africa (COMESA), as well as a delegation from the COMESA Monetary Institute (CMI).
According to State Information Service Egypt, the program was part of CBE's continuous collaboration with the CMI, aiming to enhance integration among African central banks and improve their ability to evaluate climate risks impacting the banking sector and financial stability. The five-day event took place at the Egyptian Banking Institute (EBI) in Cairo, featuring specialized discussions and practical exercises on integrating climate risks into stress tests, along with presentations from experienced central banks.
The sessions addressed the application of stress-testing to various banking risks, such as credit and liquidity risks, and explored the effects of climate change and interbank contagion risks. The discussions were designed to enhance central banks' capabilities in assessing the impact of different scenarios on financial institutions' robustness.
Delivered by lecturers from the CBE's Macroprudential Supervision Sector, Off-site Supervision Sector, and the Sustainability Department within the Financial Inclusion Sector, the program combined theoretical and practical elements on incorporating climate risks into stress-testing frameworks. It provided a platform for central bank representatives to exchange expertise on current practices and challenges in evaluating climate risks and their potential effects on banking performance and resilience.
The training emphasized the significance of stress tests in helping central banks determine financial institutions' resilience against various economic and financial scenarios, including those posed by climate change. At the program's conclusion, participants developed proposals and recommendations to deepen understanding of integrating climate risks into stress testing, to be discussed by central bank governors at their upcoming annual meeting in Malawi in November 2026.
This initiative underscores the efforts to bolster coordination and expertise-sharing among African central banks in tackling emerging risks and creating supervisory tools to evaluate banking systems' resilience. It highlights the importance of regional cooperation in advancing supervisory frameworks and exchanging technical practices, aiding central banks in addressing climate risks within broader risk-management and financial stability efforts across COMESA member states.