Strengthening Financial Surveillance: A Practical Approach to Systemic Risk Monitoring

The world was taken by surprise by the global financial crisis that started in 2007. In response, there has been a proliferation of international initiatives to improve the quantitative toolkit for systemic risk monitoring. The IMF has played a key role in supporting these efforts, given its surveillance mandate and increasing role as a global risk advisor. Indeed, well before this crisis, the Fund started to strengthen the analytical underpinnings of its risk assessments and has strived to remain at the frontier of macro-financial analysis, including in areas such as macroprudential policy, stress testing, and interconnectedness and spillovers. The Fund's Systemic Risk Monitoring (SysMo) project aims to take stock of these efforts and to make this knowledge widely available. It responds in particular to demand from policymakers and practitioners for practical guidance on using tools for systemic risk monitoring. For this purpose, it proposes an innovative approach to monitor systemic risk, based on combinations of existing individual tools. In providing direction on using a wide array of tools, SysMo also reflects the full range of country circumstances across the Fund’s membership, and helps policymakers to customize systemic risk monitoring accordingly.