Financial Stability Reports

Financial stability can be defined as “a condition in which the financial system is not unstable”. It can also mean a condition in which the three components of the financial system – financial institutions, financial markets and financial infrastructure – are stable. The Financial Stability Review provides an overview of potential risks to financial stability in the euro area. It aims to promote awareness in the financial industry and among the public of euro area financial stability issues.

A common measure of stability at the level of individual institutions is the z-score. It explicitly compares buffers (capitalization and returns) with risk (volatility of returns) to measure a bank’s solvency risk.

Financial regulators and central banks in over 60 countries publish Financial Stability Reports about the health of their banking, financial and payments systems. These are a rich source of information on the structure of financial systems, recent trends in banking and finance, and the impact of the global economy on local markets.