Committee to Establish the
National Institute of Finance
Providing the data and analytic tools needed to safeguard the U.S. financial system
The National Research Council of the National Academies Examines the Issues of Data and Research Needed to Regulate Systemic Risk  E-mail

To inform the ongoing discussions of financial reform plans in the United States Congress and elsewhere, the National Research Council of the National Academies held a workshop on November 3, 2009, in response to a written request from Senator Reed of the Senate Banking Committee. The goal was to identify the major technical challenges to building the capability for monitoring and regulating systemic risk in the financial sector. The workshop is summarized in a recently released workshop report, available from the National Academies Press, Technical Capabilities Necessary for Systemic Risk Regulation: Summary of a Workshop. Among other things, the report addresses the following questions:

  • What data and analytical tools are currently available to regulators to address this challenge?
  • What further data-collection and data-analysis capabilities are needed?
  • What specific resource needs are required to accomplish the task?
  • What are the major technical challenges associated with systemic risk regulation?
  • What are various options for building these capabilities?

Among the conclusions:

  • "It was widely acknowledged at the workshop that the United States currently lacks the technical tools to monitor and manage systemic financial risk with sufficient comprehensiveness and precision."
  • "Market efficiency will be enhanced by improved intelligence about what is going on in the system as a whole."
  • "Existing capabilities to value individual instruments and manage firm-specific risks and capture system-wide exposures are not a sufficient foundation for systemic risk management."

We encourage you to download and read the full report.