In 2013, the CFSI—a measure of stress in financial markets—has remained low, as financial conditions continue to improve. The CFSI’s securitization market has been contributing most to the overall level of financial stress.
(PRWEB) April 19, 2013
The Cleveland Financial Stress Index (CFSI)—a tool that allows policymakers and financial analysts to monitor the condition of financial markets—now offers daily updates and tracks stress in the real estate and securitization markets, in addition to credit markets, equity markets, foreign exchange markets, and funding markets.
The CFSI, which was developed by researchers at the Federal Reserve Bank of Cleveland, uses data from 16 components reflecting six key financial sectors. Previously published on a monthly basis, the index and its components are now updated daily, enhancing the ability to track the reaction of markets to specific economic events.
According to the Cleveland Fed’s Tim Bianco, the CFSI was elevated at the beginning of 2012, but declined as the year progressed. In 2013, the CFSI has remained low, as financial conditions continue to improve. In recent months, the CFSI’s securitization market has been contributing most to the overall level of financial stress, while the foreign exchange and funding markets have been contributing little stress.
In addition to being a useful tool for financial analysts and investment professionals, the CFSI also allows regulators to monitor stressful episodes as they are building. Early detection is important because when significant stress occurs in multiple markets, overall financial stress is quickly amplified.