Financial stability describes the overall resilience of the system, focusing on imbalances and stresses in the financial system in the aggregate. While macro-prudential supervision takes a similarly broad view, it must also focus on specific sources of instability or specific groups of financial institutions, adding the policy component to the oversight function.
Overall, the effectiveness of macro-prudential supervision depends on many inputs, including quantitative or qualitative information from supervisors, regulators, macroeconomists, market participants and other stakeholders in seeking to identify systemic risks and proposing policy responses. The analysis for systemic risk surveillance and assessment is indeed very demanding, 3 and as much of the credibility of the entire framework depends on it.