The Application of Visual Analytics to Financial Stability Monitoring

• Published in: IDEAS Working Paper Series from RePEc
• Main Authors: Flood, Mark D, Lemieux, Victoria L, Varga, Margaret, Wong, BL William
• Format: Paper
• Language: English
• Published: St. Louis Federal Reserve Bank of St. Louis 01.01.2014

This paper provides an overview of visual analytics -- the science of analytical reasoning enhanced by interactive visualizations tightly coupled with data analytics software -- and discusses its potential benefits in monitoring systemic financial stability. Macroprudential supervisors face a daunting challenge with at least three facets of the financial system. First, the financial system is complex, enormous, highly diverse, and constantly changing. Second, the set of financial and econometric models proposed to help comprehend threats to financial stability is large, diverse, and growing. Third, certain regulatory activities, such as rulemaking and decision-making, generate special requirements for transparency and accountability that can complicate or restrict the choices of tools and approaches. This paper explores these challenges in the context of visual analytics. Visual analytics can increase supervisors' comprehension of the data stream, helping to transform it into actionable knowledge to support decision- and policy-making. The paper concludes with suggestions for a research agenda.