Several analytical tools and models are being developed for this type of analysis, including early warning models and financial stability indicators that use the information content of available financial and macroeconomic data to identify, early on, where imbalances may be building up.
They serve as a milestone, helping us evaluate progress as we move to Basel II. We now must determine the reasons for the results from QIS4. Were there limits to the QIS4 exercise? Is there a need for adjustments to the Basel framework itself?