Assessing Financial Stability: A Comparison of Financial Stability Reports Published by Sveriges Riksbank and Bank of England in 2008

Sammanfattning: The recognition of financial stability as a central public policy objective has led to a growing number of central banks publishing Financial Stability Reports (FSRs). In this study, FSRs published by Bank of England and Sveriges Riksbank are assessed, compared and areas of potential improvement are identified. The main conclusions are that Bank of England shows more evidence of applying an integrated approach to financial stability, increasing the likelihood of identifying interdependencies and potential channels of contagion, while the Riksbank’s reports offer more clarity and consistency over time. Moreover, Bank of England lets the FSR play a more proactive role in the work for financial stability. The thesis also discusses the usefulness of the methodological framework used for the comparison of reports. It is found that the framework does not sufficiently take into account varying levels of complexity of financial systems, nor changes in the economic environment. The main finding is therefore that the framework for assessment of FSRs, launched by International Monetary Fund senior economist Martin Cihák in 2006, suffers from several drawbacks.