OFR released its 2018 Annual Report to Congress, which examines risks to the financial stability in the United States. The report states that risks to the U.S. financial stability remain in the medium range, reflecting a mix of high, moderate, and low risks to the financial system.
The report assesses the state of the U.S. financial system, including an analysis of potential emerging threats to the financial stability of the United States, key findings from the OFR research and analysis, and the status of the efforts of OFR in meeting its statutory obligations and fulfilling its mission. The report fulfills the statutory requirement of OFR to assess potential threats to the stability of the U.S. financial system, describe key OFR findings, and discuss the status of the efforts of the OFR in meeting its mission. The report also includes the following
- A spotlight on financial markets
- A discussion of OFR data initiatives
- Information about the initiative to refocus the OFR mission on primarily supporting the Financial Stability Oversight Council and its member agencies
- Updates on the work of OFR to improve financial data standards, including by advancing the Legal Entity Identifier (LEI), a data standard similar to a bar code that identifies parties to financial transactions
The assessment concludes that macroeconomic risks remain moderate, market risks remain high, and contagion and credit risks are moderate while solvency and leverage risks remain low under most conditions. Non-financial corporate credit growth is robust, credit quality shows signs of weakening, and credit risk is rising with growth in leveraged lending. However, consumer credit remains a lesser concern. Additionally, solvency and leverage risks remain low under most conditions. Large banks and insurers hold capital well above regulatory minimum requirements, but a few U.S. global systemically important banks could fall below those minimums under severely adverse conditions. Funding and liquidity conditions are generally good and continue to support corporate borrowing. For large banks, funding and liquidity risks appear low. Market liquidity risks also appear low, but can change rapidly. The assessment also highlights that cybersecurity remains a key risk. Digital assets, commonly known as cryptocurrencies, are not a concern at this point, but are worth monitoring because their use is rapidly growing and evolving.
Keywords: Americas, US, Banking, Insurance, Financial Stability, Credit Risk, Market Risk, Liquidity Risk, OFR
FSB finalized the toolkit of effective practices to assist financial institutions in their cyber incident response and recovery activities.
HKMA urged authorized institutions to take early action to adhere to the IBOR Fallbacks Protocol, which ISDA is expected to publish soon.
FSB published a global transition roadmap for London Inter-bank Offered Rate (LIBOR).
HM Treasury published a document that summarizes the responses received from a consultation on the approach of UK to transposition of the revised Bank Resolution and Recovery Directive (BRRD2).
HM Treasury published the government response to the feedback received on the consultation for updating the prudential regime of UK before the end of the Brexit transition period.
In a recent statistical notice, BoE announced publication of the reporting schedule for statistical returns for 2021.
EC welcomed the joint declaration by 25 EU member states on building the next generation of cloud in Europe.
MAS published amendments to Notice 648 on the issuance of covered bonds by banks incorporated in Singapore.
FDIC has selected 14 technology companies—including Accenture Federal Services, LLC, Fed Reporter, Inc, and S&P Global Market Intelligence, LLC—for inclusion in the next phase of the rapid prototyping competition.
GLEIF announced that financial institutions worldwide can realize a variety of cost, efficiency, and customer experience benefits by assuming a new “validation agent” role within the Global Legal Entity Identifier (LEI) System.