And important blind spots in our view of the financial system remain, in part owing to data gaps. When it comes to financial stability, what you do not know really can hurt you – and there remains a good bit we do not know.10 This lack of data can impede the design of regulation.
There is a long history of data collection focused on banks, and supervisory data have contributed to our quantitative approach to regulation and supervision. For example, when we examine the likely implications of the failure of an institution’s largest counterparty, we learn a great deal about the health of that institution and gain greater insight into its connections, through that counterparty, to other institutions.