The IMF-FSB Early Warning Exercise
What is the Early Warning Exercise?
The Early Warning Exercise (EWE) is a semiannual assessment by the IMF and the Financial Stability Board (FSB) of low-probability, high-impact risks —also known as tail risks— to the global economy. It was created in 2008 when the G20 asked both institutions to work jointly on an early warning exercise to help policymakers spot tail risks and vulnerabilities that could lead to further systemic shocks.
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Assessing systemic tail risks
The EWE examines unlikely but plausible risks that would necessitate additional policy recommendations to those related to baseline projections presented in the World Economic Outlook, Global Financial Stability Report, and the Fiscal Monitor. The EWE does not attempt to predict crises. Rather, it seeks to identify the vulnerabilities that could trigger systemic crises, and identifies risk-mitigating policies, including those that would require international cooperation.
