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NBU Presents Interactive Page of Financial Stress Index

NBU Presents Interactive Page of Financial Stress Index

In order to improve the transparency of the financial sector, the National Bank of Ukraine (NBU) has launched an interactive format of the Financial Stress Index, the second dashboard dedicated to the financial stability indicators.

The NBU is monitoring a number of financial stability indicators so as to control systemic risks of the financial sector and provide a timely response. Starting in March 2020, the NBU’s official website contains a dashboard Loan Portfolio Quality (NPLs).

The Financial Stress Index (FSI) is an important financial stability indicator that reflects the current stress in the financial sector of Ukraine. The values of the FSI range from 0 to 1, where 0 is the absence of any pressures, and 1 is the highest level of distress.

The FSI is calculated based on 20 indicators grouped by five sub-indices:

  • banking sector sub-index
  • household behavior sub-index
  • corporate securities sub-index
  • government securities sub-index
  • FX market sub-index.

Each sub-index is assigned an initial weight according to its volume and effect on the financial sector of the country.

The FSI takes account of the effect that the correlation between indices changes over time. This allows taking into account a strengthening of links between economic sectors under unfavorable conditions, which may additionally deepen the crisis.

Read more about the methodology behind the FSI calculation at the link.

The Financial Stress Index allows:

  • measuring the stress level of the financial system
  • assessing the depth and duration of instability in financial markets and comparing with the stress caused by previous crises
  • assessing the effectiveness of anti-crisis measures (combined with other indicators)
  • determining the nature of shocks to the financial system and its separate components (whether they are systemic or occasional).

The FSI reflects only the current condition of the financial sector and does not signal future risks that may arise over the short or long term. The index provides for a more accurate, real-time assessment of the level of stress. In particular, the FSI is useful for the central bank’s timely anti-crisis policy-making.

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