The Fed’s Board of Governors released the May 2022 Financial Stability Report, which presents key insights into the state of the American economy. What did the Federal Reserve’s latest decisive document reveal?
Monday, May 9, the central bank of the United States shared its biannual report on the national financial system. While the report’s purpose is to assess the resilience of the U.S. economy, it also identifies and measures significant risks.
In the most recent edition, the Fed Financial Stability Report warns of “increased uncertainty about the economic outlook.”
Important takeaways from the Fed Financial Stability Report
As of May 2022, the Federal Reserve has identified a series of risks contributing to market liquidity decline:
- Increasing interest rates;
- Russian invasion of Ukraine;
- Omicron variant news;
- Elevated inflation;
- Monetary policy tightening;
- Employment losses;
- High debt levels in China
Principles for assessing the financial stability efforts of federal oversight bodies – by third parties and on their own behalf – were published in a report Thursday by the Government Accountability Office (GAO).
The framework contains six components containing 18 key principles and related standards. It provides criteria for assessing the financial stability efforts of the Financial Stability Oversight Council (FSOC) and its member agencies (including NCUA), the GAO said.
GAO said the framework reflects consideration of its prior work and other relevant literature, internal control and risk-management standards, and discussions with a wide array of stakeholders. The components of the framework include mandate and scope; governance; risk assessment; risk mitigation; evaluation; and data and information.
“The framework principles reflect governance and operational standards and practices that, if met, promote sound decision-making around financial stability policy,” the report states. “As such, it is intended as a resource not only for GAO, but also for FSOC and its member agencies (in developing and implementing financial stability policy), the Inspectors General community (in overseeing FSOC and its member agencies’ activities), and Congress (in considering legislation related to financial stability). In addition, the framework may be used by legislators, regulators, and auditors in public-sector roles in other countries as well as by observers and analysts in the private sector.”