This story appeared in Bank Digest.
The Office of Financial Research has issued an update to its assessment of threats to financial stability, concluding that overall risks remain moderate. OFR Director Richard Berner said, however, that this assessment "should not be cause for complacency" because the agency's "analysis suggests the need to remain vigilant about emerging threats." These threats include increased risk taking in a climate of persistently low interest rates, fragile and fragmented market liquidity in some securities markets, and continued migration of financial activity outside the banking system, according to the OFR's announcement
The agency formed its assessment using updates to the OFR Financial Stability Monitor and the monitor's underlying data. The monitor is a tool the OFR developed to display a high-level summary of five areas of risk. The latest version of the monitor can found on the agency's website at financialresearch.gov/. The OFR has also published a companion analysis paper discussing specific risks that merit attention.