Based on empirical evidence, changes in the distance to default represent a useful forward-looking indicator for stability assessment purposes, especially if based on weighted average values for the entire banking sector rather than for each individual bank. In general, marketbased fragility indicators are a useful supplement to supervisory data, which are derived as a rule from accounting records.
(2002a), Monetary Policy in a Changing Economic Environment, Federal Reserve Bank of Kansas City Economic Review 87, 15-36. Issing, O. (2002b), Monetary Policy in a World of Uncertainty, speech delivered at the Economic Policy Forum, Paris, http://www.ecb.int/key/02/sp021209.htm. Issing, O.