Latest from the OFR

The OFR exercises the power of transparency by improving the quality, scope, and accessibility of financial data.

The financial crisis of 2007-09 now seems distant, and the chance of a future financial disruption seems remote. So it’s not surprising that some question why we need continued vigilance over financial stability. But, if nothing else, we learned in the crisis that vigilance is vital.

U.S. long-term interest rates have risen from all-time lows in July, driven by stronger global economic data, higher inflation expectations, and growing expectations of a U.S. shift from monetary to fiscal policy stimulus. However, U.S. long-term rates and volatility remain low by historical standards.

Data are the lifeblood of finance, and the volume of financial data is staggering. On a routine day, close to $15 trillion in payments settle across the world. Regulators need data to oversee firms and markets, but data collection is not always smooth or efficient. This inefficient reporting can be costly and undermines quality.

Our first Annual Research Review contains synopses of our working papers, briefs, and viewpoint published in fiscal 2016. Two themes emerge. First, our research reflects the importance of our independent view, which we are free to take because the OFR does not make policy. Second, the publication illustrates the importance of our mandate to improve financial data.

The authors create an agent-based model that can help regulators understand risk in the interbank funding market. Tests of the model against actual bank failures before, during, and after the 2007-09 financial crisis suggest that the market has become more resilient to asset write-downs and liquidity shocks. The model uses balance sheet data from more than 6,600 U.S. banks.

Three of the biggest U.S. banks have moved up in systemic risk ratings, according to new international data the OFR added today to its online interactive chart. The risk ratings of Chinese banks also rose, continuing a three-year trend.

Overall risks to U.S. financial stability remain in a medium range, the Office of Financial Research said today in releasing its 2016 Annual Report to Congress and 2016 Financial Stability Report. Financial system resilience has continued to improve, but new threats have arisen, including from global disruptions and financial system evolution.

The 2016 Financial Stability Report contains an in-depth analysis of our assessment of U.S. financial stability. The first chapter frames our assessment of financial stability risks in five risk categories that we monitor regularly. The second chapter analyzes seven key threats in depth. This report supplements our 2016 Annual Report to Congress.

This 2016 Annual Report to Congress fulfills our statutory reporting requirements to assess potential threats to the stability of the U.S. financial system, describe key OFR findings and insights, and document our progress in meeting our mission. The report also outlines our priorities for fiscal year 2017 and beyond.