Systemic Risk Colloquium Offers a Master Class on Financial Regulation

By Karen Guzman

When Gaston Gelos PhD ’98 finished explaining how the International Monetary Fund monitors financial stability, students at the Yale School of Management had questions—lots of questions.

Gelos, an assistant director in the IMF’s Monetary and Capital Markets Department who heads the Monetary and Macroprudential Policies Division, began the conversation on a Friday afternoon last fall by giving an overview of the IMF’s monitoring role. Then the students, all central bankers themselves, wanted details.

“How are systemically important jurisdictions selected?” asked Ola Williams ’18, who has worked for the U.S. Federal Reserve.

“How does the IMF address disagreements over data that nations provide?” asked Özgü Özen Çavusoglu ’18, who is from the central bank of Turkey.

“What kind of guidance does the IMF provide countries on financial innovations?” asked Marcos Noyola Rincon ’18, who is from the Dominican Republic’s central banking system.

The students were the inaugural class in Yale SOM’s Master’s Degree in Systemic Risk program, which offers a specialized degree for early- and mid-career employees of central banks and other major regulatory agencies and focuses on macroprudential policy, financial crisis management, global financial regulation, monetary economics, capital markets, and central banking. The class includes six students who represent central banks of Mexico, the Dominican Republic, Turkey, and Indonesia, as well as the Board of Governors of the U.S. Federal Reserve System.

Over the course of one academic year, students in the program complete a slate of required courses focused on the global financial system. They also take specialized elective courses, such as statistics, economics, and finance.

Gelos was a speaker in the program’s weekly Systemic Risk Colloquium, which brings into the classroom practitioners from central banks and other agencies with responsibility for monitoring the stability of the financial system and—if necessary—managing financial crises.

He offered students a window into how the IMF operates in countries around the world. “We study what’s happening globally,” he said. “What are the key themes? What do we want to warn about and what policy messages do we want to send?”

Other speakers this year include Wilson Ervin, the vice chairman of Credit Suisse and the bank’s former chief risk officer; Elsie Addo Awadzi, senior counsel for financial and fiscal law at the International Monetary Fund; and Thomas Laubach, director of the Division of Monetary Affairs at the Board of Governors of the Federal Reserve.

Andrew Metrick, the Michael H. Jordan Professor of Finance and Management and director of the Yale Program on Financial Stability, says that since students in the program represent agencies around the world, colloquium speakers are chosen to present diverse viewpoints.

“We really have a very global group, so we want speakers who will represent varied perspectives,” he says. “We’re also planning to include some speakers from the private sector.”

In addition to hosting guest speakers, the colloquium will offer students a forum to share their research. Students create a thesis project over the course of the year and will present their work during the colloquium meetings in the spring.

In coming years, Yale SOM is planning to grow the Master’s Degree in Systemic Risk program. Demand for skilled financial regulators will continue to grow worldwide in the wake of the 2008 financial crisis, Metrick says. “Central banks have been given a lot more responsibility for systemic risk, for financial stability,” he explains. Many central banks have set up entire divisions that didn’t exist before the last crisis.”

Tackling financial stability and systemic risk challenges aligns perfectly with Yale SOM’s mission to educate leaders for business and society, Metrick says. “It’s a critical area and very underserved,” Metrick says. “Over time, there are going to be a lot more people doing this kind of work.”