First

This paper presents background work that has been the basis for the development of the market and credit risk indicators (MRI and CRI, respectively) as published in the IMF''s Global Financial Stability Report (GFSR) since September 2004. The fundamental idea was to build a set of Financial Indicators on Risk and Stability (FIRST) that could reflect the market perceptions for current and future stress on financial institutions. The focus of the analysis is mainly on large, complex financial institutions (LCFIs) operating in the most advanced financial markets, MRI and CRI have also been applied to internationally active commercial banks and insurance companies.Credit risk;Financial stability;Financial risk;Markets;Global Financial Stability Report;Financial systems;financial institutions, probability, probabilities, correlation, financial system, correlations, financial sector, hedging, financial markets, financial instruments, hedging strategies, international financial markets, sensitivity analysis, interest rate policy, derivative, financial market, stock market crash, random variables, stock exchanges, hedge, normal distribution, standard deviations, derivative market, stock market, monte carlo simulation, computation, credit derivative, international capital, predictions