13.10 Cleveland financial stress index.

Several of the banks in the Federal Reserve system have developed indices to serve as barometers of the health of the U.S. financial system. For example, the Federal Reserve Bank of Cleveland constructed an index known as the Cleveland Financial Stress Index (CFSI). The CFSI is designed to track distress in the U.S. financial system on a continuous basis. The CFSI tracks stress in six types of markets: credit markets, equity markets, foreign exchange markets, funding markets (interbank markets), real estate markets, and securitization markets. An index reading of zero implies that financial conditions are normal, while a positive reading indicates that the financial system is experiencing some degree of stress. Consider data on daily CFSI readings from January 1, 2014, to August 7, 2014.⁶

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