Supporting financial stability is one of the Bank’s objectives noted in the Bank of Israel Law, 5770-2010. Accordingly, Bank of Israel economists identify the financial system's exposures to the main risks, assess them, analyze potential stress scenarios and examine the system's resilience to them. This analysis is published in the biannual Financial Stability Report. To support this effort, and in line with the worldwide common practice, we develop a Monitor for Financial Stability in Israel. The monitor is a tool for assessing the potential vulnerabilities in the financial system. The monitor is presented as a heat map of approximately 51 quantitative indicators. Its purpose is to provide an early signal of the development of financial system risks in Israel, to indicate changes in the level of its vulnerabilities—and to display a snapshot of weaknesses in the financial system based on five functional areas of risk. This paper describes the goals of the monitor, the underlying methodology and its main uses, and discusses the interpretation of the findings obtained from it.​

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