Financial stability and systemic risk

Abstract

Recent episodes of financial crises have provided empirical evidence that financial stability is a necessary condition to support sustainable macroeconomic growth. Likewise, systemic risk has become an important measure in macroeconomic risks, especially in light of the increased concern about its ability to distress the economy. The economic authorities thus need to have an understanding of systemic risk given that it may become elevated through the exacerbation of vulnerabilities triggered by shocks arising from different elements of the financial system, including the macroeconomic environment.