Financial Stability Imbalance
2012/06/25 1 Comment
Nowadays we can easily get the news about ‘crisis’, like global crisis or financial crisis dozens of times. There’s danger lurking everywhere in Korea economy with high price, oil, polarization and slow growth. Then what about Korea economy? The bank of Korea says that they developed an index which can be an indicator of economy’s health. This is called FSI(Financial Stability Imbalance).
FSI (Financial Stability Imbalance) is an index which converts many economic indicators to only one indicator so we can get information of finance fluctuation obviously. Also it can be used when diagnose macro prudential situations quickly to catch systemic risk which caused by financial imbalance. It is calculated with 20 indicators which represent financial stability quickly responded well. After the survey to financial specialist and economist, it is calculated with weighted average.From 0 to 100, it is more unstable when get closer 100 point.
Using this index, Korea have suffered three times of crisis so called ‘real’ crisis since 1996. Asian financial crisis in 1998, IT bubble crash of 2001 and global financial crisis of 2008, while Asian financial crisis placed first in shock wave, global financial crisis came second, followed by IT bubble crash. Then how’s the Korean economy level goes now? The level of FSI has been goes up and down with “Caution” step but not goes up to “Severe”.