July 10, 2017

IMF published a working paper that identifies common international threads in the data needed for financial stability analysis and suggests ways to address these. The paper discusses how financial stability is analyzed, identifies the datasets typically used in financial stability analysis, addresses the data gaps that have emerged, and sets out proposals for how economic and financial statistical manuals can better meet the financial stability data needs, without undermining the conceptual framework.

The paper discusses the governance arrangements that have emerged for financial stability assessment. This includes tools such as broad-based capital tools (for example, dynamic provisioning, countercyclical capital buffers, and time-varying leverage ratio caps); sectoral capital and asset-side tools (for example, foreign currency loans to corporates, caps on loan-to-value, debt-service-to-income, and loan-to-income ratios); and liquidity-related tools (such as the liquidity coverage ratio); and the tools to contain maturity mismatch (such as core funding ratios) and price-based tools (such as a levy on volatile funding). Other policy tools include capital surcharges for global and domestic systemically important institutions and increases in risk-weights and large exposure or concentration limits. The report also highlights that stress tests have increasingly become integral to financial stability analysis as a method of testing the resilience of the financial sector. There remains room for improvement to use stress testing as a tool for macro-prudential risk assessment going beyond its traditional use for micro-prudential supervision.

 

The report also highlights that policies have been developed to address potential financial stability risks arising from non-bank activities, such as central clearing of over-the-counter derivatives, and from market infrastructure, such as ensuring the resilience of central counterparties (for example, margining requirements and liquidity resources). However, the policy applications of financial stability analysis and the tools used to meet financial stability needs are still developing. The paper concludes that more work is required to meet financial stability analysis data needs, not least in implementing the initiatives underway. This includes data on shadow banking, capital flows, and corporate borrowing, as well as the increased demand for granular data. The paper notes that, while the specific datasets used can differ across country and over time, common patterns of data use emerge. 

 

Related Link: Working Paper on Financial Stability Analysis (PDF)

Keywords: International, Banking, Securities, Insurance, Financial Stability Analysis, IMF

Related Articles
News

BCBS and IOSCO Extend Implementation of Final Phase of Margin Rules

BCBS and IOSCO agree to one-year extension of the final implementation phase of the margin requirements for non centrally cleared derivatives.

July 23, 2019 WebPage Regulatory News
News

APRA Proposes Stronger Remuneration Requirements in Australia

APRA is proposing to strengthen prudential requirements for remuneration across all APRA-regulated entities in the banking, insurance, and superannuation industries by issuing CPS 511, a new prudential standard on remuneration.

July 23, 2019 WebPage Regulatory News
News

PRA Consults on Availability of Group Own Funds Under Solvency II

PRA published a consultation paper (CP16/19) that sets out its proposed approach to the determination of the availability of subordinated liabilities and preference shares in group own funds.

July 22, 2019 WebPage Regulatory News
News

EIOPA Consults on Methodological Principles for Insurer Stress Testing

EIOPA published a discussion paper on the methodological principles for stress testing the insurance sector in EU.

July 22, 2019 WebPage Regulatory News
News

US Agencies Adopt Rule to Exclude Community Banks from Volcker Rule

US Agencies (CFTC, FDIC, FED, OCC, and SEC) adopted a final rule to exclude community banks from the Volcker Rule, in line with amendments to certain sections of the Economic Growth, Regulatory Relief, and Consumer Protection (EGRRCP) Act.

July 22, 2019 WebPage Regulatory News
News

US Agencies Adopt Amendments to Simplify Regulatory Capital Rules

US Agencies (FDIC, FED, and OCC) adopted a final rule that reduces regulatory burden by simplifying several requirements in the regulatory capital rules for banks.

July 22, 2019 WebPage Regulatory News
News

IA of Hong Kong Delegates Inspection and Investigation Powers to HKMA

HKMA and IA of Hong Kong jointly issued a statement announcing the delegation of the inspection and investigation powers of IA to HKMA, pursuant to the statutory regulatory regime for insurance intermediaries under the Insurance Ordinance.

July 19, 2019 WebPage Regulatory News
News

FSB Extends Implementation Timeline for Policy Recommendations on SFTs

FSB announced adjustments to the implementation timelines for its recommendations on securities financing transactions (SFTs), specifically those related to the minimum haircut standards for non-centrally cleared SFTs.

July 19, 2019 WebPage Regulatory News
News

EBA Single Rulebook Q&A: Third Update for July 2019

EBA published answers to six questions under the Single Rulebook question and answer (Q&A) tool this week.

July 19, 2019 WebPage Regulatory News
News

EBA Report Assesses Regulatory Framework for Fintech Activities

EBA published the findings of its analysis on the regulatory framework applicable to fintech firms when accessing the market.

July 18, 2019 WebPage Regulatory News
RESULTS 1 - 10 OF 3494