Measuring systemic risk: the role of macro-prudential indicators
This article outlines some of the key indicators the Reserve Bank uses to help inform macro-prudential policy decisions. Macro-prudential indicators (MPIs) play an important role in the identification of financial system risk; the assessment of the banking system's capacity to weather periods of financial stress; and in signalling periods of financial stress. The indicators inform decisions to both deploy and remove macro-prudential instruments. The article explains how the MPI framework helped to frame the recent decision to impose residential mortgage loan-to-value (LVR) restrictions. Data-file for MPIs (XLS 1.1MB) discussed in the main text of this article.