This integrated framework is a cornerstone of our monetary policy strategy and guides the preparation of each monetary policy meeting, especially in the quarterly meetings in which new staff macroeconomic projections are presented together with comprehensive reports on monetary and financial developments.
To that end, deeper analysis of reverse stress testing to cover hypothetical portfolios and market conditions which go beyond ‘extreme but plausible’ would also be helpful. This is why CPMI-IOSCO have identified stress testing as a policy priority, and will soon launch a work stream to develop potential guidance regarding best practices and methodologies.