(Credit: studio-fi/iStock by Getty Images) 

By Romain Veyrune

September 19, 2025/IMFBlog

Central banks pride themselves on being data-driven and consensus-based. Surprisingly, though, there is little consensus among policymakers on a crucial issue: how much capital should these institutions hold?

Unlike commercial banks, central banks don’t have universally prescribed minimum capital requirements. They can’t go bankrupt, because they can always issue their own currency to meet their nominal payment obligations. Even so, a weak capital position can diminish institutional credibility and potentially increase risks to independence. Hence central banks do care about maintaining sufficient capital buffers. But there is a diversity of views on how to get there.

This is why we propose a new approach of stress-testing central banks to help them maintain a sound financial position.

Balance sheet risk received little attention through most of the long history of central banks. Before the global financial crisis, they typically had small balance sheets and were almost always profitable. This reflected that currency, their main liability, paid zero interest, and that they could invest the proceeds that they received from issuing currency in interest-bearing government bonds. Much of the profit was paid out as dividends to governments.

But the issue, which may sound arcane, has much more practical relevance today when central banks have taken on much more balance sheet risk, including using large-scale asset purchases to spur a faster recovery from the GFC and the pandemic.

Managing risk

This additional risk has translated into sizable losses, as they bought long-term bonds at low yields and eventually had to raise interest rates sharply. While the losses are not a good measure of the social value of central banks actions, which shortened the recessions and improved financial stability, they underscore the need to consider carefully how to better manage balance sheet risk.

Studying the bylaws of central banks provides little clarity about how to proceed. Many set their authorized capital as a fixed amount, which loses relevance over time due to inflation. Only a few institutions adjust their capital—based on inflation or gross domestic product—to keep it relevant.

Unfortunately, existing laws about distributing central bank profits are also quite mechanical. In some cases, they determine exactly how much gains should be kept or shared, which can result in having too much or too little capital. At best, these laws require banks to keep profits until they reach a minimum level of capital. But legal targets vary a lot—from 8 percent to 20 percent of base money—and there is little explanation for thresholds. At the other end of the spectrum, some central banks lack specific rules on capital, leaving it up to their boards to decide how to handle risks. Yet, whatever they choose to do, central banks are generally reluctant to explain their approach to a broader audience.

There’s a better way. The key is to ensure that capital cushions are more consistent with “policy solvency”—with the central bank’s ability to fulfil its mandate in an environment of much greater balance sheet risk. This means considering several factors, such as institutional objectives and activities.

Shock absorber

Specifically, stress-testing can help a central bank gauge the level of capital that would allow it to absorb large but plausible shocks without pushing capital to very low levels that could weaken its credibility and independence. To this end, IMF staff developed a quantitative model, building on 2015 research by Robert E. Hall and Ricardo Reis, that allows assessing how capital would evolve in a framework that takes account of interest rate risk, credit risk, and foreign exchange risk. A stress test would consider inflation and other broad economic dynamics, and how they would affect capital.

This approach can also help decide when a capital increase through profit retention is warranted—or when and how to share profits while protecting capital levels. Some central banks may find such a risk-based approach appealing, especially if they perceive that a weak capital position could constrain their independence. Others may view little risk to their credibility or independence, and prefer to retain their current policy for capital distributions. But even in these circumstances, they may see stress-testing as a way to enhance transparency about the likely effects of balance sheet actions such as quantitative easing, and desirable for strengthening public accountability.

The IMF has published a guidance note on central bank stress-testing, and we provide technical assistance on that topic to our member countries. To be sure, these unique institutions have a specific public mission which distinguishes them from commercial firms. But sometimes the approaches taken to supervise private banks can illuminate the debate about central banks

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June 3, 2024/KnowBe4

KnowBe4, the provider of the world’s largest security awareness training and simulated phishing platform, today released its new 2024 Phishing by Industry Benchmarking Report to measure an organization’s Phish-prone Percentage (PPP) (http://apo-opa.co/3Vp1KFQ), indicating how many of their employees are likely to fall for phishing or social engineering scams. 

This year’s report shows that according to baseline testing across industries, untrained employees in Africa fare worse at 36.7% than the worldwide average of 34.3%. This means that, in general, employees in African countries are more likely to click on malicious links or comply with fraudulent requests. This marks an increase from the previous year’s report. It is important to keep in mind the considerable linguistic, cultural, and economic diversity of the continent as well as the daunting challenges African countries are currently facing when examining its state of cybersecurity. 

KnowBe4 analysed 54 million simulated phishing tests involving nearly 12 million users across 55,675 organisations in 19 different industries, establishing a PPP baseline indicating the click rates on phishing tests by employees without KnowBe4 security awareness training.

Although the PPP varied greatly across African sectors and countries, the findings in the report still show the effectiveness of combining simulated phishing security tests with security awareness training. Organisations in African countries that engaged in consistent training and testing experienced a significant decrease in their average PPP to 22% within the first 90 days, and a further reduction to 5.9% after a year of continuous training and testing. 

These results are higher than the global average of 18.9% after 90 days and 4.6% after one year of consistent training and testing, suggesting that at least in theory, employees in African countries are more vulnerable to falling victim to cybercrime. This emphasises the need for organisations to focus on mitigating the human risk that exists when safeguarding against cyber threats. 

Despite the challenges faced by African countries, its people, and in turn by the organisations and employees operating in it, the overall decline in PPP over three and 12 months is still significant. This improvement is evidence that transforming cybersecurity culture requires breaking existing habits to make way for more secure ones. As employees embrace new behaviours, they become engrained, evolving into standard practices that shape organisational culture and create a workforce that instinctively prioritises security. 

Some interesting facts highlighted and discussed in the report include:

• The expected increase in cyberattacks on government departments and infrastructure
• Africa’s increasing usage of technology and connectivity, and the new risks and vulnerabilities it brings
• The cybersecurity challenges faced by the continent 
• Regulatory compliance laws that exist in certain African countries, while most have none 
• The expected economic impact of cybercrime
• Sentiment towards AI and new technologies is highly positive across Africa

“Cybersecurity challenges in Africa require a combination of regulation, guidelines and security awareness training. Particular focus is needed on threats like deepfakes used for political manipulation, especially ahead of major elections in various African countries,” says Anna Collard, SVP content strategy & evangelist Africa at KnowBe4. “More public-private partnerships are essential to build capacity, address the skills shortage, and improve resilience in the digital world. Investing in Africa’s youth and providing cybersecurity training opportunities can fill the skills gap and also address youth unemployment.”

This year’s report also examines phishing benchmarks from North America, South America, Europe, United Kingdom & Ireland, Asia, Australia and New Zealand.

To download a copy of the 2024 KnowBe4 Phishing by Industry Benchmarking Report, click here: http://apo-opa.co/3VnKDEz. 

The post Insights From KnowBe4’s Annual Phishing Benchmarking Report – Navigating Cyber Threats in Africa appeared first on Investadvocate.

January 9, 2024/Oilprice.com

Tom Kool
Editor, Oilprice.com

WTI crude gained more than 2% on Tuesday morning, erasing some of Monday’s losses, but increasingly negative sentiment in oil remains a prime risk.

Start to 2024 Oil Trading Looks Increasingly Bearish

– Hedge funds and other money managers are increasingly bearish on the oil markets’ outlook, adding a combined 61,000 short positions in Brent and WTI crude in the week to January 2.

– This marks the largest week-on-week increase in short positions since March and the second largest since mid-2017, brushing aside ongoing Red Sea shipping woes or Libyan supply disruptions.

– Whilst the markets were abuzz on Saudi Arabia’s pricing cuts, the rebalancing of commodity indexes from Goldman Sachs or Bloomberg in 2024 might have had an ever bigger impact. 

– The BCOM target index for WTI decreased from 7.77% to 7.36%, prompting Citigroup to assess the impact of funds exiting WTI length at around $2 billion, the equivalent of 27,000 long positions.

Market Movers

– UK-based energy major Shell (LON:SHEL) signed a 20-year LNG supply deal with Ksi Lisims LNG, a consortium of Canadian gas producers, for 2 million metric tonnes a year starting from 2030.

– US refining major Phillips 66 (NYSE:PSX) is actively discussing the sale of some of its non-core assets for $3 billion, under pressure from activist investors Elliott Investment Management. 

– South Korea’s leading EV battery maker LG Energy Solution (KRX:373220) posted Q4 results that were almost half of the expected $460 million, including a $191 million tax credit from the US government. 

Tuesday, January 09, 2024

The combined effect of hedge funds’ massive selling and Saudi Arabia cutting its February formula prices for all continents created a perfect storm for oil prices, sending WTI below $70 per barrel in intraday trading again. Both Brent and WTI have recovered since as Libya called force majeure on Sharara operations and the US dollar halted its upward surge, however weakening sentiment might prompt another downward slide this week. 

Saudi Arabia Price Cut Stokes Demand Fears. Saudi Aramco slashed its February-loading prices for Asian customers by $2 per barrel, bringing the price of Arab Light to the lowest level since November 2021 at $1.50 per barrel over Oman/Dubai, prompting concerns that Asian demand feels weak. 

Nigeria’s Megarefinery to Start Test Runs This Week. According to Nigerian sources, Nigeria’s  650,000 b/d Dangote refinery could begin test runs as early as this week after receiving six crude cargoes from the country’s offshore fields, aiming to reach full capacity refining by year-end.

US Supreme Court Dismisses Case of Oil Majors. The US Supreme Court declined to hear the case of ExxonMobil (NYSE:XOM), Koch Industries and the American Petroleum Institute, deciding that lawsuits over the oil industry’s “deceptive” actions vis-à-vis climate science should be heard in state courts. 

Copper Contango The Steepest Since 1992. As the metal markets expect copper demand to perk up later this year but LME inventories remain ample at 161,725 metric tonnes, contango in the LME copper contract, the discount of cash futures to the 3-month contract, has widened to a 31-year maximum of $107/mt.

Chesapeake Set to Seal Next Major M&A Deal. Following last month’s Occidental-CrownRock deal, the merger of US natural gas producers Chesapeake Energy (NASDAQ:CHK) and Southwestern Energy (NYSE:SWN) is reportedly entering its final phase to create a $17 billion shale gas champion. 

Iran Wants Higher Prices from Chinese Refiners. Iran’s oil exporters are withholding shipments to China as they demand narrower discounts, with recent offers heard around $5 per barrel below Brent on a delivered basis, squeezing the supply options of Chinese “teapot” refiners. 

Libya Calls Force Majeure on Shut Field. Libya’s National Oil Corporation declared a force majeure at its 300,000 b/d Sharara oilfield as ongoing protests made it impossible to carry on with normal operations, also suspending crude deliveries to Libya’s largest eastern port of Zawia. 

Leaking Gulf of Mexico Pipeline Remains Shut. The million-gallon oil spill from the Main Pass Oil Gathering pipeline in November remains a mystery as investigators still failed to discover the subsea source of leakage, keeping some 61,000 b/d of oil production in the Gulf of Mexico shut.

Venezuela Unable to Lift Production Soon. Venezuela’s Oil Ministry reported that oil production in the country rose slightly to 802,000 b/d in December, underperforming the 1 million b/d year-end target set by President Maduro as output remains lower than in the summer months, despite the lifting of sanctions. 

ADNOC Eyes Turkmenistan’s Gas Bounty. ADNOC, the national oil company of the UAE, has signed a memorandum of understanding with Turkmenistan to cooperate in the development of the supergiant 265 TCf Galkynysh gas field, boosting the odds of the field 3rd phase coming together.  

Cold Snap Sends Gulf Freight Skyrocketing. The arrival of a polar front bringing strong waves and high waves to Texas has debilitated ship-to-ship operations in the US Gulf Coast, halting most of lightering until at least Wednesday, sending regional Aframax and Suezmax rates to 2-month highs.

Namibia’s Production Outlook Turns Brighter. Boasting the multi-billion-barrel discoveries of Venus and Graff in 2021-2022, Namibia’s portfolio shines even brighter as Portugal’s Galp Energia (ELI:GALP) reported indications of hydrocarbons at its Mopane-1 exploration well to the northeast of Venus. 

Japanese Firms Ramp Up Investment in US LNG. One of Japan’s largest utility companies Kyushu Electric Power (TYO:9508) is reportedly considering investing in Energy Transfer’s (NYSE:ET) Lake Charles LNG project and sign a 20-year LNG supply deal, locking in 1.5-1.6 million tonnes per year.

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