This paper presents background work that has been the basis for the development of the
market and credit risk indicators (MRI and CRI, respectively) as published in the IMF’s
Global Financial Stability Report (GFSR) since September 2004. The fundamental idea was
to build a set of Financial Indicators on Risk and Stability (FIRST) that could reflect the
market perceptions for current and future stress on financial institutions. The focus of the
analysis is mainly on large, complex financial institutions (LCFIs) operating in the most
advanced financial markets, MRI and CRI have also been applied to internationally active
commercial banks and insurance companies.