OFR Offers New Vision of Systemic-Risk Analysis, Financial-Stability Impact
The Office of Financial Research’s latest systemic-risk assessment reiterates much of the market analysis in the FRB’s recent report (see Client Report SYSTEMIC89), the FSB’s analysis (see Client Report NBFI), and the OCC’s risk matrix. Further, OFR’s analyses have less policy impact especially in light of the pending Administration change. Nonetheless, its conclusion – that no prior metrics or models proved their predictive power when COVID hit – reflects considerable internal thinking at U.S. and global agencies. As OFR now notes, many analyses up to the point at which the financial system collapsed in March judged systemic risk as “moderate” or better.
