<p><br/></p><p><font size="4">This paper reviews the state-of-the-art of macro stress-testing<br/>methodologies. Substantial progress has been made both in the<br/>econometric analysis of financial soundness indicators and in the<br/>simulation of value-at-risk measures to assess system-wide<br/>vulnerabilities. However, a number of methodological challenges still<br/>remain concerning the correlation of market and credit risks over<br/>time and across institutions, the limited time horizon generally used<br/>for the analysis and the potential instability of reduced-form<br/>parameter estimates because of feedback effects. Further research<br/>in this area might also focus on how to use macro stress-testing<br/>techniques as an operational tool to incorporate financial stability<br/>considerations into monetary policy decision-making.<br/></font></p>