Assessing the risks to the operation of the financial intermediation system

In assessing the performance of the financial intermediation system, Eesti Pank proceeds from whether and to what extent the operation of the system enables the central bank to achieve its primary goal; i.e., price stability.

In its assessment, the threats to the performance of the financial intermediation system are classified as follows:

 Low risks - the operation of the financial intermediation system enables the central bank to fulfil its primary goal; i.e., achieving price stability, but further work on improving the system is necessary.

 Risks are average and a small share of the risks may have been realised - the operation of the financial intermediation system enables the central bank to achieve its primary goal; i.e., price stability, but corrective intervention is necessary (e.g., changing regulations).

 Risks are high and have been realised to a substantial extent - the operation of the financial intermediation system is hindered; corrective measures or crisis management activities are necessary.

The risk assessment is accompanied by an explanation and an opinion on the further potential developments of the financial intermediation system. Although the financial intermediation system's operability and its threats are monitored and analysed constantly, Eesti Pank publishes detailed survey and risk assessments twice a year (in spring and autumn) in the Financial Stability Review.

Financial Stability Review is

 An outcome of oversight and analyses; i.e., the input material for the central bank's decision-making process;

 A means for safeguarding the operability of the financial system, in which it is possible to forward messages to domestic and foreign economic agents whose attitudes and behaviour affect the future operability of the financial sector.