Fed study proposes method for tracking banks' systemic risks more often

12 September 2018 9:47pm
US Federal Reserve researchers suggested a new way to estimate bank assets more frequently to enable closer monitoring of financial stability risks in an institution and the industry.

The novel approach would allow monthly estimates of banks’ portfolio composition compared with current use of public quarterly or annual reports.

“Our method provides a robust forecasting tool for market regulators to assess systemic risk in a timely manner,” wrote Celso Brunetti, head of the Fed’s systemic financial institutions unit, and two outside professors.

Their 52-page paper this month called the current approach “cumbersome.” It added: “Our method provides practical means for assessing complex financial institutions which trade hundreds of financial products in markets around the world”.