Information and Statistical Efforts of Selected Safety Network Institutions in the Area of Financial System Stability

Financial system stability is considered a public good. The main role of the financial safety network is to stabilise the system. Information and statistical activities of institu­ tions which belong to the safety network are the tools which may improve the stability. We need to stress that most decisions are based on information, in particular decisions on investment or speculation, hence by providing information and statistical data these institutions indirectly enhance the overall stability of the system. An overview and analysis of selected studies addressing financial system stability helped the authors draw theoretical and practical conclusions as to the stability itself and the impact of information and statistics upon its improvement.


Introduction
Financial system stability became a real issue in the late 20th century due to a series o f financial crises. Before the latter occurred, safety mechanisms in financial systems The goal of the paper is to make an overview and assess information and statistical activities of selected institutions within the safety network geared at enhancing finan cial system stability. By analysing the content o f reports drafted by m ajor institutions involved in m aintaining the stability o f financial systems we will be able to compare the main objectives behind such reports, as well as similarities and differences in their approaches and data presentation. Moreover, the above findings will help draw the main conclusions about theoretical and practical aspects of the stability of the system. The paper is com posed o f several essential parts. The first one provides a litera turę review on the financial system theory, its definition and the notion o f stability.
The second part exam ines inform ation and statistical activities o f the International M onetary Fund. In the third part we discuss the content of an NBP report on financial system stability. Finally, the fourth part describes the specificity o f the financial stability assessment by the European Central Bank. The paper finishes with final conclusions.

Literaturę Review: Notions Related to the Financial System and Its Stability
Financial system stability has been explored on many occasions in specialist literature. The question concerns and covers various aspects o f finance and the financial system. The scope o f financial system stability should be taken as a starting point o f the overview. To define the subject o f our paper we should explain the notion of a financial system and then focus on its stability.
Financial system can be understood as a "set o f logically lin ked organ isation al structures, legal acts, fin a n c ia l institutions a n d oth er elem ents th at en able establishing fin a n cia l relations in the real sector as well as in finance"4.  Knowing how the financial system, which impacts the economy, works is a condition for its sm ooth perform ance. It also encourages a reflection over its efficiency and effectiveness. Obviously, a properly operating and stable financial system is crucial for the growth o f the econom y o f any country11. Independently o f the approach, a financial system is decisive for the allocation of resources and building-up a modern econom y12. Due to m ultidim ensional and complex links between its elements and the financial environm ent, disturbances originating from any element o f the system may underm ine its overall stability. Thus, to define financial system stability we need to adopt a comprehensive approach.
Financial stability consists in a dynam ic and lasting equilibrium experienced in interlinked financial m arkets13. Equilibrium means reducing emerging imbalances and coping with them before they have becom e dangerous. A sim ilar definition is proposed in the F in an cial Stability R ep ort, where financial system stability is characterised as a state in which the system operates efficiently on a continuous basis, even if unexpected, unfavourable and little likely disturbances occur at a substantial scale14.

Box 1. O v e rv ie w o f ap p ro a c h e s to th e fin a n c ia l system
Analytical approach Characteristics Vision of the financial system

Institutional
Financial system depicted and classified from the viewpoint of financial institutions; additionally a selected feature of institutions is often analysed (e.g. competitiveness, investors' rights protection, quality of financial regulations).
Financial system as a set of specific financial institutions classified in different groups.
Narrow functional

Monetary
Financial system analysed primarily in the context of provision of funds to the real sector through the central bank and commercial banks.
Financial system as a mechanism providing funds to the real economy.

Based on intermediation
Financial system analysed against its two major functions: intermediation between its surplus and deficit actors and transformation.
Financial system as an intermediation mechanism between surplus and deficit actors of the real economy.

Broad functional
Financial system analysed from the viewpoint of its functions. Supporters of such an approach argue in favour of its relative stability and comparability of functions of national financial systems.
The notion of financial system covers a network of financial markets, intermediaries and other institutions, which help deliver all financial plans of households, enterprises and the government.

Systemie
Financial system described as relations between its components and their impact upon the system (the idea of complementarity and coherence).
Financial system as an orderly set of complementary and possibly coherent elements or subsystems. indirectly targets its entities is crucial24. Under present econom ic conditions, such as, e.g., the global polarisation o f production and consum ption, surpluses and deficits, savings and debt, econom ic growth and stagnation, as well as growing market risk, increased supply o f m oney and political and social tensions, financial system stability is param ount and apparently increasingly more difficult to maintain.

Information and Statistical Activities of the International Monetary Fund
The The report com es with a vast database o f prim ary data, which enables mapping and processing numerical data, generating comparisons and graphic representations.
The data is aggregated at different levels, from sectoral data for individual countries to regional or global data.
Under another information and statistical initiative, the IM F reports the so called

Table 1. S elected indicators o f fin a n c ia l s ta b ility o f th e b an k in g system in Poland
Indicator

NBP Financial Stability Report
The conditions, w hich may favour system stability. The report in question highlights some relevant theses, which may be used to sketch the idea o f stability. They are29: • financial system stability is the pre-condition for long-term econom ic growth; • banking sector stability is particularly relevant for m  Table 2 31.   Table 2    • to take account o f potential increases in interest rates in banks lending policies, in particular for long-term loans;

Table 2. S elected indicators re fle c tin g th e c o n d itio n o f g roups o f e n titie s in th e b a n k in g sector
• to pursue a prudential loan policy vis-a-vis the com m ercial real estate sector (offices, retail and service space); • to take particular care of adequate assets liquidity in open-ended investment funds.
The N BP Financial Stability R eport is an elaborate document, which may be a source o f comprehensive inform ation about the stability o f the financial system in Poland.
Its great advantage is the attached database o f source data available in spread sheets that enable their further processing.

ECB F in a n c ia l S ta b ility R e v ie w
The last one on the list o f discussed studies is the F in an cial Stability R eview published by the European Central Bank since 2004 every six months. The report examines potential sources of risk and threats to the financial stability in the eurozone.
Similarly to the N BP report discussed in Section 3 above, the Review is intended to promote knowledge about issues relevant to ensure financial system stability, in this case in the euro area, in the financial sector and to a broader stakeholder group. Thus, the docum ent, being the source o f inform ation about the risks and weaknesses of the financial system, is a tool designed to prevent financial crises34.
Remarkably, the review stresses that financial stability is understood as a state whereby the build-up o f systemic risk is prevented. Systemic risk can derive from three sources: the endogenous build-up o f financial imbalances, usually associated with the boom ing business cycle, large aggregate shocks hitting the econom y or the financial system, and mechanisms that transmit crises as a result of contagion effects35.
We need to stress that these terms, even if often used interchangeably to describe the propagation o f crisis in the economy, put accents differently and have been explicitly defined and described in literature36.
The above understanding o f financial system stability in a way determ ines the analytical approach. M ain substantial aggregates o f the analysis and its layout reflect the logic o f the m echanism , which proves that a crisis may com e "from the outside", disseminate across financial markets and financial sector stability is a safety buffer for the real economy.
Financial sector stability is com posed of: • an analysis o f the m acro-financial and credit environment considering, inter alia, external and political risks as well as the situation o f households; • an overview o f financial markets stability; • an analysis o f financial institutions' stability, including financial standing, stress tests and a synthesis o f changes in the regulatory framework.
The report is highly informative when it comes to financial system stability because it is drafted from the perspective o f the entire euro area. It means the analysis does not target the circum stances o f individual countries but financial systems o f the area com prising countries using the same currency. The report does not provide numerical data, which to an extent restricts the analysis and makes it difficult for a reader to further process the source material.

Conclusion
Financial system stability is desired and necessary for econom ic growth. Financial system stability, i.e., its resilience to destabilising occurrences determ ines the overall robustness o f the economy. Financial systems provide a safety buffer, which restricts systemic risk caused by crisis-inducing impulses generated by individual entities.
The literature review has led us to the follow ing theoretical conclusions on financial system stability: • financial system stability is a public good; • a properly functioning financial system, also its stability, is crucial for the growth of any econom y; • disturbances originating from any com ponent of the financial system may underm ine its overall stability, which is why we need to take a systemic approach to the analysis o f financial system stability; • the stability o f financial markets results from the synergy of regulatory framework, binding m arket solutions and principles o f financial market arrangements and the financial m arket development.
As already noted stability is the ability o f financial system institutions to con- • informative relevance o f docum ents produced by safety network institutions is substantial when reports are made available together with source data; • substantive value o f reports remains in line with their specificity, i.e.: -those which tackle regional or global markets do not inform about the circumstances in individual countries, hence their applicability in micro-analyses is rather limited; -those which refer to the stability o f individual markets or econom ies are little useful for m acro-or global analyses.
We need to bear in m ind that in particular investment and speculation decisions are taken based on available information. Information and statistical efforts of financial institutions brought together in a safety network exert an im pact upon participants to financial markets. They do so by generating reliable market data and making it available for further analyses. The final outcome should improve financial system stability in the com m on interest o f its actors and stakeholders.