Latest from the OFR
March 31, 2015
The divergence of global monetary policies remains a dominant theme, driving important market trends. While the Federal Reserve is expected to tighten policy, many other central banks are undertaking additional easing. The expansion of quantitative easing programs and negative interest rates — which may be justified to prevent economic stagnation — entail financial stability risks that warrant monitoring and, where possible, mitigation.
March 26, 2015
This paper shows that the fundamental legal structure of a well-written financial contract follows a logic that can be formalized mathematically as a "deterministic finite automaton." This allows, for example, automated reasoning to determine whether a contract is internally coherent and complete. The paper illustrates the process by representing a simple loan agreement as an automaton.
News & Events
March 24, 2015
Remarks by OFR Director Richard Berner at the Financial Regulation Summit: Data Transparency Transformation
Director Berner discusses how the OFR is developing and promoting data standards, and meeting the critical needs to share data and to fill data gaps.
March 17, 2015
This brief argues that U.S. stock prices today appear high by historical standards, using a quantitative threshold to identify potential stock market bubbles. Although the financial stability implications of a market correction could be moderate due to limited liquidity transformation in the U.S. equity market, the brief discusses other financial stability issues that may be more relevant, such as leverage, compressed pricing of risk, interconnectedness, and complexity.
March 10, 2015
This paper presents a model of market liquidity in which those who need to sell come into the market with a greater need for immediacy than those who are willing to buy. This is a critical market dynamic behind the illiquidity that arises during market dislocations and crises, when some are in forced-selling mode while others are hesitant to come in and take the other side of the trade.
March 03, 2015
This paper examines the results of four rounds of stress testing of the largest U.S. bank holding companies, starting in 2009. The data reveal a growing correlation in results from one year to the next, highlighting whether the stress tests in their current form may be losing some of their information value over time. The authors discuss the implications of these patterns and recommend greater diversity in the stress scenarios analyzed.
February 25, 2015
Financial market volatility has increased significantly since late 2014. This is a shift from several years of largely depressed volatility, which contributed to excessive financial risk-taking as discussed in the OFR 2014 Annual Report. It remains to be seen whether this is an enduring normalization of volatility and what lasting effect, if any, it will have on financial risk-taking and stability.
This plan provides OFR leaders with a roadmap for achieving the Office’s mission, vision, goals, and objectives. It also fulfills the OFR's commitment to being transparent and accountable, and to linking activities to strategic goals and performance metrics.
February 12, 2015
This brief analyzes new data about the nation’s most systemically important bank holding companies — financial institutions whose failure could pose the greatest threat to the international financial system.
News & Events
February 12, 2015
The OFR released a brief today analyzing new data about the nation’s most systemically important bank holding companies — financial institutions whose failure could pose the greatest threat to the international financial system.