GRA · Financial Stability
Spatial financeWhere capital meets hazard, exposure and transition
Published scenarios
Financial stability scenarios differ from firm stress tests: they let sectors react to each other, so margin calls, redemptions, deleveraging and fire sales can amplify one shock. This page describes system-wide scenario designs and the amplifiers they include, with physical and operational shocks added to market narratives. Values are design values, never forecasts.
Published scenarios in three parts.
Releases appear as they are reviewed.
Analysis runs in Foundry; reviewed releases are listed here.
System-wide exploratory scenarios.
A system-wide scenario applies one shock to several sectors and lets their responses interact: margin calls on leveraged funds, redemptions from open-ended funds, bank deleveraging, insurer asset sales. The Bank of England's system-wide exploratory scenario is a public example of the design. Financial Stability adds physical and operational shocks to the market narrative, for example a hurricane that disrupts a financial centre while repricing insured and mortgage exposure.
| Amplifier | Where it appears |
|---|---|
| Procyclical margin | Central clearing and bilateral derivatives |
| Liquidity mismatch | Open-ended funds offering daily redemption |
| Leverage | Hedge funds, liability-driven investment, private credit |
| Fire sales | Common holdings across funds and insurers |
How the process runs.
Process explorer · Process
Published scenarios: How an economic shock propagates
8 steps·4 stages
Process
Published scenarios: How an economic shock propagates
Input-output models trace a change in final use or primary input prices through industry linkages, with multipliers for output, income and employment.
01 Shock and linkages
- 01ShockDataset · Deposit insurerA shock enters as an exogenous change in final uses, or as a change in the price of a primary input.
- 02Input-output linkagesModel · Deposit insurerBackward linkages tie an industry to its suppliers, forward linkages to its buyers. The model assumes fixed technical input coefficients.
02 Economy
- 03Sector outputModel · Deposit insurerThe quantity model estimates how a change in final uses affects output. Output multipliers give the production needed per unit of final use.
- 04PricesModel · Deposit insurerThe price model simulates cost-driven inflation from changes in primary input prices. It assumes perfect competition.
03 People
- 05JobsDataset · Deposit insurerEmployment multipliers represent jobs created per unit of currency of additional final use.
- 06Household incomeDataset · Deposit insurerIncome multipliers show how final use changes affect household income. A social accounting matrix shows the circular flow of income.
04 State
- 07Public financesStep · Deposit insurerEffects on public revenue and spending need government accounts linked to the model, for example in a social accounting matrix.
- 08Policy responseDecision · Deposit insurerThe responsible party decides on a response. The same linkages can be used to test it.
Outline of an external standard or method, from its public sources. It describes what the framework says, not a record of any run. It does not show that Nexus or any partner performs, certifies or approves a step. A gate is a step of the method, never a Nexus approval. The models assume fixed technical coefficients and are not forecasts.
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