Twelve Years of Promoting Financial Stability

Last month marked the 13th anniversary of the Office of Financial Research (OFR) and approximately 12 years since the OFR began to assess financial stability risks in earnest. Our job is to research, investigate, and report on risks to the financial system; assess how much of a threat such risks might pose; and provide policymakers with financial analysis, information, and evaluation of policy tools to mitigate those risks.

Here’s a look back at some of the OFR’s achievements. Over the past 12 years, we have:

• published 140 pieces of research that discussed and quantified vulnerabilities across the financial system and covered areas central to the OFR’s mission, such as assessing digital currency and banking-sector stability, measuring Treasury market liquidity and leverage in hedge funds, and evaluating the risks and benefits of central counterparties;

• produced analysis of digital assets, published insights into opaque parts of the repo and securities lending markets, and mapped the financial system to show how risks can spread;

• played a leading role in the development and implementation of data standards such as the Legal Entity Identifier, promoted the use of data standards in swap data reporting, and partnered with our international counterparts to develop financial-data standards for over-the-counter (OTC) derivatives;

• answered regulators’ calls for greater insight and transparency into the repo market by launching an ongoing collection of data on centrally cleared transactions (data that is used to construct the Secured Overnight Financing Rate), then turned our attention to the noncentrally cleared bilateral segment;

• developed a secure, cloud-based collaboration space for use by the OFR and the Financial Stability Oversight Council (Council) member agencies to integrate and analyze a broad spectrum of financial and other relevant data, using a platform created to support computing-intensive research using large datasets;

• increased market transparency by developing new monitoring and risk-assessment tools to identify and analyze financial-stability threats and assess the interplay among them, and by deploying application program interfaces that let users quickly access our publicly available data;

• partnered with other U.S. government agencies to release the National Standards Strategy for Critical and Emerging Technologies, which is designed to promote U.S. leadership and competitiveness in international standards development; and

• through the OFR Data Center, met our Dodd-Frank Act requirement to prepare and publish a publicly accessible financial company reference database and a financial instrument reference database.

Since its inception, the OFR has made great progress in promoting financial stability. Today, we can see into the dark corners of the market more clearly than ever before—but our work is far from complete.

As the financial system changes, evolves, and innovates, new threats and vulnerabilities continuously emerge. The OFR faces these challenges every day—head on—by working to fill data gaps and providing essential research that will help us not only understand the financial system of today but also assesses vulnerabilities that could threaten the financial system and economy of tomorrow.

We will continue our work of promoting substantive analysis and understanding of financial-stability issues that impact the financial markets for many years to come.