systemic risk

Robin Harding

One line intrigued me in Federal Reserve chairman Ben Bernanke’s speech yesterday, which was otherwise a bland recap of Fed positions on financial reform. In his comments on improving information about risks to the financial system he said that:

…the Federal Reserve is expanding its already-extensive commitment to the collection and analysis of financial data. For example, efforts are under way to construct better measures of counterparty credit risk and interconnectedness among systemically critical firms.

In particular, to better identify potential channels of financial contagion, supervisors are working to improve their understanding of banks’ largest exposures to other banks, nonbank financial institutions, and corporate borrowers. We are also collecting data on banks’ trading and securitization exposures, as well as their liquidity risks, as part of an internationally coordinated effort to improve regulatory standards in these areas.

New Fed measures of credit risks Read more