We argue that the rapid asset growth of nonbank financial intermediaries (NBFIs) relative to banks is the outcome of transformations of risks between banks and NBFIs that increase the interconnectedness of the two sectors. These transformations are consistent with avoiding tighter, post-GFC bank...

Bank failures can stem from runs on otherwise solvent banks or from losses that render banks insolvent, regardless of withdrawals. Disentangling the relative importance of liquidity and solvency in explaining bank failures is central to understanding financial crises and designing effective...

This paper applies the Growth-at-Risk (GaR) framework to assess downside risks to euro area GDP growth, and it examines its usefulness for stress testing. Supervisory stress-test scenarios are often criticized for being either too mild or implausibly severe, raising questions about calibration....

In essence, the currently large stablecoins are electronic money issued by narrow balance sheet vehicles into a distributed ledger (or a "programmable platform"). Many believe that they will have significant success as a new form of money. Members of the current US administration expect that US...

The paper synthesizes global experiences and key lessons in the regulation and supervision of cyber risk in the financial sector. It draws on the IMF’s financial stability surveillance and technical assistance work. It underscores the increasing frequency and complexity of cyber threats. These...

Banks use synthetic risk transfers (SRTs) to offload potential losses in their loan portfolios to non-bank investors while retaining the loans on their balance sheets. We investigate this trillion-euro market using transaction-level data from the euro area, the largest SRT market, and highlight...

This paper provides an evidence-based assessment of the EU supervisory landscape by combining a comprehensive mapping of supervisory models and authorities with an analysis of capital market players across key sectors, including market infrastructures, asset management, and crypto-asset service...

This paper studies the role of banking supervision in anticipating, monitoring, and disciplining failing banks. We document that supervisors anticipate most bank failures with a high degree of accuracy. Supervisors play an important role in requiring troubled banks to recognize losses, taking...

External ratings (agency ratings) and internal ratings were already in use before Basel II, as powerful management tools. Basel II "adopts" them (the former in the Standard approach, the latter in the IRB approaches) in a productive way: internal ratings represent the final summary of the...

This study quantifies the impact of geopolitical risk on euro area banks using the 2025 EU-wide stress test, the first to include an explicit geopolitical scenario. Comparing outcomes with earlier stress tests, we find that geopolitical shocks measurably erode capital ratios, with smaller and...

This paper argues that the European macroprudential regime has evolved into a complex architecture of buffers, national discretion, and instrument-specific controls due to persistent doubts regarding the credibility of the EU bank resolution regime. Moreover, macroprudential controls are...

This first climate transition risk stress test for the Albanian banking sector assesses the macroeconomic and financial sector implications of Albania's shift to a low-carbon economy under different climate policy scenarios. It builds upon earlier exposure analyses conducted for the Albanian...

This paper examines the benefits and implementation challenges of the newly revised Basel Core Principles (BCPs) for effective banking supervision. It outlines the rationale for the 2024 reform led by the Basel Committee on Banking Supervision (BCBS), highlights key enhancements, and provides...

Monetary and Capital Markets (MCM) department delivered a hybrid technical assistance (TA) mission to assist the Bangko Sentral ng Pilipinas (BSP) in developing a supervisory framework for operational resilience. An earlier mission in 2022 assisted BSP to develop a regulatory framework for...

This technical note focuses on regulation and supervision of less significant institutions as part of the Slovak Republic's Financial Sector Assessment Program. Národná banka Slovenska's (NBS) supervisory approach focuses on Less Significant Institution (LSI) risks and vulnerabilities however...

Supporting the Authority´s objectives on development of risk-based supervision of the banking sector, this technical assistance for the Bank of Lao P.D.R., conducted in Vientiane from June 10-14, 2024, provided advice on improvement of the aspects of risk-based supervision, including revising...

This literature review aims to support the work of the Basel Committee on Banking Supervision by providing insights from academic and policy work (including policy notes and speeches). It also draws on lessons from observed bank failures and supervisory practices. It provides key messages on...

The objective of the current work is to estimate to what extent support measures of the Bank of Russia and the Government of the Russian Federation promoted financial stability of banks and the financial market overall so to sustain lending economy-wide during the crisis periods of 2014, 2020,...

A large literature at the intersection of economics and finance offers prescriptions for regulating banks to increase financial stability. This literature abstracts from the discretion that accounting standards give banks over financial reporting, creating a gap between the information assumed...