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Jan 7, 2012 · A series of responses across the polls consistently show that preponderant majorities believe they are confronting greater financial risk than earlier generations.
- Systemic and Non-Systemic Risk
- Volatility
- Counterparty Risk
- Default Risk and Interest Rate Risk
Risks are typically one of two types: systemic or non-systemic. A systemic risk is one that happens within a company or group of companies that can create havoc throughout an entire industry, sector, or economy. The financial crisis of 2007-2008 is an example, as a handful of large institutions threatened the entire financial system. This gave rise...
Volatility is the speed of movement in the price of an asset. A higher level of volatility indicates larger moves and wider changes in the value of an asset. Volatility is a non-directional value—a higher volatility asset has an equal likelihood of making a larger move up as it does down, which means they have a larger impact on the value of a port...
Counterparty risk is the possibility that one party of a contract defaults on an agreement. It is a risk, for example, in a credit default swap instrument. Credit swaps represent the exchange of cash flows between two parties and are typically based on changes in the underlying interest rates. Counterparty defaults on swap agreements were one of th...
Default risk is most often associated with bond and fixed income markets. It is the risk that a borrower may default on its loan obligations and not pay the lender outstanding amounts. Generally, a higher possibility of default results in a larger amount of interest paid on a bond. Thus, there is a risk/reward tradeoff investors must consider when ...
The overall risk to the financial system is broadly unchanged since November 2017. Elevated financial vulnerabilities have the potential to amplify the effects of adverse shocks on the economy and the financial system.
Aug 21, 2023 · The 2022 financial stability conference focused on frontier risks, a new normal, and policy challenges. This Economic Commentary summarizes the academic papers and keynotes featured.
Aug 6, 2020 · What financial risks still remain, how can we make financial markets and institutions resilient to shocks that we know—and don’t know—are out there, and what role does policy have in reducing risk and promoting resiliency?
Oct 8, 2014 · 1. Policymakers are facing a new global imbalance: not enough economic risk-taking in support of growth, but increasing excesses in financial risk-taking posing stability challenges. 2. Banks are safer but may not be strong enough to vigorously support the recovery.
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Jul 8, 2024 · In these studies, scholars advance several ways through which greater financial inclusion can lead to financial stability.
