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

IMF Releases Report on 2019 Article IV Consultation with United States

IMF published its staff report in the context of the 2019 Article IV consultation with the United States.

June 24, 2019 WebPage Regulatory News
News

BIS Report Discusses Regulatory Issues Related to Big Techs in Finance

BIS has pre-released a chapter of the BIS Annual Economic Report; this chapter focuses on the risks and opportunities presented by large technology firms in the financial services sector.

June 23, 2019 WebPage Regulatory News
News

IOSCO Report Examines Liquidity in Corporate Bond Markets

IOSCO published a report that examines the factors affecting liquidity, under stressed conditions, in the secondary corporate bond markets.

June 21, 2019 WebPage Regulatory News
News

FED Publishes Results of the 2019 Stress Tests for Banks

FED published a report presenting results of the Dodd-Frank Act Stress Test (DFAST) exercise for 2019.

June 21, 2019 WebPage Regulatory News
News

BCBS Report Examines Global Pillar 2 Supervisory Review Practices

BCBS published a report that examines the Pillar 2 supervisory review practices and approaches in Basel member jurisdictions.

June 21, 2019 WebPage Regulatory News
News

IASB Publishes Work Plan and Meeting Updates for June 2019

IASB published an updated work plan and a summary of its June meeting, which presents preliminary decisions of the Board.

June 21, 2019 WebPage Regulatory News
News

HKMA Publishes Banking Exposure Limits Code Under Banking Ordinance

HKMA issued a circular to all authorized institutions informing that the Banking (Exposure Limits) Code has been published in the Gazette on June 21, 2019.

June 21, 2019 WebPage Regulatory News
News

OSFI Proposes Guideline on Internal Model Oversight for Insurers

OSFI proposed the draft guideline E-25 on the internal model oversight framework for federally regulated property and casualty (P&C) insurance companies.

June 21, 2019 WebPage Regulatory News
News

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

Under the Single Rulebook question and answer (Q&A) updates for this week, EBA published one answer regarding the calculation of institution-specific countercyclical capital buffer rates.

June 21, 2019 WebPage Regulatory News
News

SEC Finalizes Capital and Margin Requirements for Security-Based Swaps

SEC adopted a package of rules and rule amendments to establish capital, margin, and segregation requirements for security-based swaps, under Title VII of the Dodd-Frank Act.

June 21, 2019 WebPage Regulatory News
RESULTS 1 - 10 OF 3304