Financial Stability Review

The Financial Stability Review is published twice a year (usually May and November).

It provides an overview of the possible sources of risk and vulnerability to financial stability in the euro area.

Its aim is to promote awareness of issues that are relevant for safeguarding the stability of the euro area financial system, both within the financial industry and among the public.

All issues

2015 May Full PDF , ePUB version
2014 November Full PDF , ePUB version
May Full PDF , ePUB version
2013 November Full PDF , ePUB version
May Full PDF , ePUB version
2012 December Full PDF
June Full PDF
2011 December Full PDF , Summary
June Full PDF , Summary
2010 December Full PDF , Summary
June Full PDF , Summary
2009 Dec Full PDF Summary
Jun Full PDF Summary
2008 Dec Full PDF Summary
Jun Full PDF
2007 Dec Full PDF
Jun Full PDF
2006 Dec Full PDF
Jun June
2005 Dec Full PDF
Jun Full PDF
2004 Dec Full PDF

About the review

Cover of the Financial Stability Review

Since 2004 the ECB has published twice a year the Financial Stability Review which provides an overview of the possible sources of risk and vulnerability to financial stability in the euro area.

The review aims to promote awareness of issues that are relevant for safeguarding the stability of the euro area financial system both within the financial industry and among the public at large. By providing an overview of the possible sources of risk and vulnerability to financial stability, the FSR also seeks to play a role in preventing financial crises.

What is financial stability?

Financial stability can be defined as a condition in which the financial system – intermediaries, markets and market infrastructures – can withstand shocks without major disruption in financial intermediation and in the effective allocation of savings to productive investment.

The three parts of the financial system:

  • financial intermediaries, such as banks, insurance companies and other institutional investors that direct funds from those willing to invest/lend to those who want to borrow.
  • financial markets, where lenders and borrowers meet. Examples are money markets and stock exchanges.
  • financial market infrastructures through which money and financial assets flow between buyers and sellers. Examples are payment systems and security settlement systems.

The financial system can be said to be stable if it displays the following three key characteristics:

  1. The financial system should be able to efficiently and smoothly transfer resources from savers to investors.
  2. Financial risks should be assessed and priced reasonably accurately and should also be relatively well managed.
  3. The financial system should be in such a condition that it can comfortably absorb financial and real economic surprises and shocks.

If any one or a combination of these characteristics is not being maintained, then it is likely that the financial system is moving in a direction of becoming less stable, and at some point might exhibit instability.

Understood this way, the safeguarding of financial stability requires identifying the main sources of risk and vulnerability such as inefficiencies in the allocation of financial resources from savers to investors and the mis-pricing or mismanagement of financial risks. This identification of risks and vulnerabilities is necessary because the monitoring of financial stability must be forward looking: inefficiencies in the allocation of capital or shortcomings in the pricing and management of risk can, if they lay the foundations for vulnerabilities, compromise future financial system stability and therefore economic stability.