Assessing Financial Stability

Financial University under the Government of the Russian Federation

Magister: Chernysh Julia

Definition

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Financial system stability in a broad sense means both the avoidance of

financial institutions failing in large numbers and the avoidance of serious

disruptions.

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Financial stability analysis is intended to help identify threats to financial system stability and to design appropriate policy responses.

Policy responses focuses:• exposures;•buffers;• economic, regulatory, and

institutional determinants of financial soundness and stability.

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The monitoring and analysis of financial stability involves:• assessment of macroeconomic conditions

• soundness of financial institutions and markets

• financial system supervision and the financial infrastructure

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conducting of stress tests

Overall Framework for Stability Analysis and Assessment

Four key elements in financial stability analysis:

1Surveillance of financial markets

early warning systems (EWSs)

2 Macroprudential surveillance tries

monitoring of financial soundness

indicators (FSIs)

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3 Analysis of macrofinancial linkages

4 Surveillance of macroeconomic conditions

indicators of access to financing by the

private sector

balance of the various sectors in

the economy