Identifying Vulnerabilities in Systemically-Important Financial Institutions in a Macro-Financial Linkages Framework

During the subprime crisis, governments intervened to stabilize the financial condition of some troubled systemically important financial institutions. Two questions naturally arise: Why do some institutions receive intervention while others not? What are the macro-financial driving forces of the vulnerabilities in the systemically important SIFIs? This column summarizes the results of some recent studies about identifying vulnerabilities in SIFIs. Overall, the existing research suggests that leverage is the most reliable indicator, while several widely used indicators are not very useful in identifying the differences in SIFIs.

Sovereign wealth funds and financial stability

The present financial crisis has placed financial stability at the forefront of policy discussions. At the same time, sovereign wealth funds have become much more significant players over the past two years. This column summarises the results of some recent studies about sovereign wealth funds and their implications for financial stability. Overall, the existing research […]