Financial System Vulnerabilities Monitor

The OFR Financial System Vulnerabilities Monitor is a starting point for monitoring U.S. financial stability. It is a heat map of 58 indicators of potential vulnerabilities in the U.S. financial system, organized in six categories: macroeconomic, market, credit, solvency and leverage, funding and liquidity, and contagion.

The monitor is designed to provide early warning signals of potential U.S. financial system vulnerabilities that merit investigation. It does not provide conclusions about financial stability. The OFR provides such conclusions in its Financial Stability Report and Annual Report.

The monitor improves upon and replaces the OFR Financial Stability Monitor.

How to Interpret the Monitor

Monitoring financial stability requires tracking both vulnerabilities and stress. The OFR Financial System Vulnerabilities Monitor identifies potential financial system vulnerabilities — underlying weaknesses in the financial system that can originate, amplify, or transmit shocks and stress. The OFR has developed the Financial Stress Index to identify the magnitude and sources of stress, when it occurs.

The Financial System Vulnerabilities Monitor color-codes key indicators of vulnerability, based on their positions within a long-term range. Scores closer to red signal higher potential vulnerability. Scores closer to green signal lower potential vulnerability. The scores are calculated and updated quarterly.

Categories of Indicators

Macroeconomic – Contains measures of macroeconomic risks to the financial system such as inflation, excessive government borrowing, and excessive reliance on cross-border financing.

Market – Contains measures of market risk such as excessive valuations, low risk premiums, and excesses in financial risk appetite and risk-taking.

Credit – Contains measures of credit risk in the real economy — the risk of widespread credit defaults or delinquencies by households and nonfinancial businesses.

Solvency and Leverage – Contains measures of excessive leverage at financial institutions or other risks to their solvency.

Funding and Liquidity – Contains measures of risks in short-term funding arrangements and liquidity for financial markets and financial institutions.

Contagion – Contains measures of potential vulnerabilities from stress transmission across financial institutions and markets, within concentrated financial sectors, and from other countries to the U.S. financial system.

More Information

For additional information about this monitor, see the working paper, "The OFR Financial System Vulnerabilities Monitor."

For information on the indicators used to construct the monitor, see the OFR Financial System Vulnerabilities Monitor Indicators Table.

Legal Disclaimer

This OFR monitor is presented solely for informative purposes and should not be relied upon for financial decisions; it is not intended to provide any investment or financial advice. If you have any specific questions about any financial or other matter please consult an appropriately qualified professional. Please also consult the original source materials including source data and other references. The OFR may provide links and references to other sites outside of these monitor pages, which are provided for information only and do not constitute endorsement by the U.S. government, the U.S. Treasury Department, the Financial Stability Oversight Council, or the Office of Financial Research, of any organizations or any third party data, content, materials, opinions, advice, statements, offers, products or services, including accuracy, completeness, reliability and usefulness. Please note that neither the U.S. Treasury Department nor the Office of Financial Research controls, and cannot guarantee the relevance, timeliness, or accuracy of third party content or other materials.