This paper proposes a working definition for “financial stability” related to systemic risk. Systemic risk is then measured as the probability of disruption of financial services taking into account its time and cross-sectional dimensions and several risk factors. The paper discusses the...

We present a methodology to construct a Broad Financial Stability Indicator (FSIB) based on unobserved common factors and a Specific Financial Stability Indicator (FSIS) for the Brazilian economy combining observed credit, debt and exchange rate markets indicators. Rather than advocate a...

We estimate an identified VAR (SVAR) with contemporaneous restrictions derived from a model of the market for bank reserves, which allows us to disentangle monetary policy shocks from demand shocks for reserves in Brazil. The main results are: i) the Central Bank of Brazil acts in order to...

This policy paper reviews the rationale for emerging market economies adopting macroprudential policies in an unstable global environment. Monetary policy in these economies is discussed with reference to its complex interaction with global events and spillovers. In particular, the paper...

We apply duration (survival) models with exponential hazard and exponential piecewise-constant hazard functions to study the determinants of bank failure over the period 1994 to 1998 in Brazil. The models deal empirically with left censoring in the data. We control for macroeconomic conditions...

Using Boot and Thakor model (1993), the paper summarizes for which parameter interval regarding regulator’s reputation the closure of banks could signalize imperfect monitoring of banks assets choice. If the regulator is non-benevolent, that is if he maximizes a welfare function that gives...

This paper characterizes external sustainability in the presence of arbitrary gross international positions. The analysis is based on the response of net exports to net foreign liabilities, and is relevant for a growing literature using the same response function approach without any...