What Can We Learn from Financial Stability Reports?

IMF Working Papers, July 30, 2021

Source details

Authors: Fabio Comelli, Sumiko Ogawa
Date: July 30, 2021
Core focus: Review of approaches to systemic risk analysis in central bank financial stability reports (FSRs) and comparison with IMF Article IV staff reports.
Sample: 32 central bank FSRs reviewed.

All reviewed FSRs include a systemic risk assessment; Article IV staff reports have not always done so.
Compared with Article IV staff reports, on average:
- FSRs tend to cover a wider range of financial risks and vulnerabilities.
- FSRs tend to have more extensive discussions of the policy mix to mitigate systemic risk.
- FSRs utilize sophisticated analytical tools, such as stress tests and growth-at-risk, more frequently than Article IV staff reports.
Article IV staff reports and FSRs frequently pick up analytical content from each other.

Frequent use of stress tests.
Frequent use of growth-at-risk frameworks.
Systemic risk assessments integrating multiple financial risks and vulnerabilities.

Central bank FSRs present a rich resource that IMF country teams can leverage in forming their independent view about systemic risk.
Leveraging FSR analytical content can complement Article IV surveillance and help form a more comprehensive assessment of systemic vulnerabilities and appropriate policy mixes.