For these reasons, there is considerable regulatory interest in these processes, an interest that has been formalized in the Federal Reserve’s annual Comprehensive Capital Analysis and Review (CCAR) and informs the emphasis of our supervision throughout the year.
Charles P Kindleberger in his modern classic “Manias, panics and crashes” described financial crises as being “like pretty women: hard to define but recognizable when encountered”. That’s nicely put, but not quite operational. The Bundesbank favours an eclectic approach to describing financial stability.