OFR Annual Report Describes Risks to Financial Stability as Moderate
OFR released its 2019 Annual Report to Congress, which examines risks to financial stability in the United States. The report assesses the state of the U.S. financial system as required by the Dodd-Frank Act, including an analysis of threats to the financial stability of the United States, key findings from the OFR research and analysis, and the status of the OFR efforts in meeting its mission. The report also includes a discussion of OFR data initiatives and information about the initiative to refocus the OFR mission on primarily supporting the Financial Stability Oversight Council and its member agencies.
The report highlights that, during 2019, OFR worked to fulfill its data-related mandates, including issuing a final rule to collect data covering centrally cleared funding regarding transactions in the U.S. repurchase agreement market, which will support a reliable, widely accepted, and transparent alternative to LIBOR. As part of other data initiatives, OFR made significant contributions toward reporting of standardized derivatives data and helped to advance the adoption of the Legal Entity Identifier (LEI), which continues to grow rapidly. OFR also continued to enhance its information technology environment and offerings.
The report states that risks to financial stability remain in the medium range, reflecting a mix of high, moderate, and low risks in the financial system. Risk is moderate in four categories—macroeconomic risk; credit risk; liquidity and funding risk; and contagion risk. Non-financial corporate credit risk has continued to rise, but household credit risk has improved. Liquidity and funding risk rose temporarily at times during the past year, but then moderated. Contagion risk is little changed. Risks associated with solvency and leverage appear relatively low. Market risk remains elevated. Although banks and insurers maintain leverage ratios consistent with low risk, leverage continues to rise among large hedge funds that may be interconnected with systemically important financial firms.
Related Links
Keywords: Americas, US, Banking, Insurance, Securities, Credit Risk, Market Risk, Liquidity Risk, LIBOR, Annual Report, OTC Derivatives, OFR
Previous Article
EIOPA Publishes Second Annual European Insurance OverviewRelated Articles
EBA Launches Stress Tests for Banks, Issues Other Updates
The European Banking Authority (EBA) launched the 2023 European Union (EU)-wide stress test, published annual reports on minimum requirement for own funds and eligible liabilities (MREL) and high earners with data as of December 2021.
EBA Proposes Standards for IRRBB Reporting Under Basel Framework
The European Banking Authority (EBA) proposed implementing technical standards on the interest rate risk in the banking book (IRRBB) reporting requirements, with the comment period ending on May 02, 2023.
FED Issues Further Details on Pilot Climate Scenario Analysis Exercise
The U.S. Federal Reserve Board (FED) set out details of the pilot climate scenario analysis exercise to be conducted among the six largest U.S. bank holding companies.
US Agencies Issue Several Regulatory and Reporting Updates
The Board of Governors of the Federal Reserve System (FED) adopted the final rule on Adjustable Interest Rate (LIBOR) Act.
ECB Issues Multiple Reports and Regulatory Updates for Banks
The European Central Bank (ECB) published an updated list of supervised entities, a report on the supervision of less significant institutions (LSIs), a statement on macro-prudential policy.
HKMA Keeps List of D-SIBs Unchanged, Makes Other Announcements
The Hong Kong Monetary Authority (HKMA) published a circular on the prudential treatment of crypto-asset exposures, an update on the status of transition to new interest rate benchmarks.
EU Issues FAQs on Taxonomy Regulation, Rules Under CRD, FICOD and SFDR
The European Commission (EC) adopted the standards addressing supervisory reporting of risk concentrations and intra-group transactions, benchmarking of internal approaches, and authorization of credit institutions.
CBIRC Revises Measures on Corporate Governance Supervision
The China Banking and Insurance Regulatory Commission (CBIRC) issued rules to manage the risk of off-balance sheet business of commercial banks and rules on corporate governance of financial institutions.
HKMA Publications Address Sustainability Issues in Financial Sector
The Hong Kong Monetary Authority (HKMA) made announcements to address sustainability issues in the financial sector.
EBA Updates Address Basel and NPL Requirements for Banks
The European Banking Authority (EBA) published regulatory standards on identification of a group of connected clients (GCC) as well as updated the lists of identified financial conglomerates.