A stable, well-functioning financial market for allA stable, well-functioning financial market for allFI analysis 2: Finansinspektionen's vulnerability indicators
FI regularly monitors the vulnerabilities in the financial system. FI is now taking this a step further by creating a categorization for grouping and studying indicators of vulnerability. A systematic review of indicators helps to identify and follow vulnerabilities, which makes it easier to understand the risks of financial or macroeconomic instability.
The indicator analysis presented here is intended as a complement to traditional expert judgments – the indicators are primarily used as a complement to further analysis.
The vulnerability indicators are grouped according to sector and vulnerability category. This grouping gives an overall picture from the indicators in each sector and category. In the article we focus on the banking and household sectors. The vulnerability categories used are liquidity, solvency and exposures. For each indicator thresholds are estimated that when exceeded signal elevated or high vulnerability.
Currently, most indicators show low vulnerability. The exceptions for the household sector are the credit gap and housing prices, which show elevated or high vulnerability. The exceptions for the banking sector are the credit gap, some liquidity indicators and concentration measures, which also show elevated or high vulnerability.
