This study examines which financial stability responsibilities have been delegated to central banks (CBs), how these responsibilities are executed, and whether democratic accountability arrangements are in place. The results of our survey among all CBs in the OECD area suggest that there is no unambiguous definition of financial stability or systemic risk, and that, generally, the responsibility for financial stability is not explicitly formulated in laws. Moreover, there is considerable heterogeneity in the way CBs pursue the financial stability objective. Our results also suggest that the democratic accountability of the financial stability function of central banks is often poorly arranged.

Between 1996 and 2005 the number of central banks that publish a financial stability review (FSR) increased from 1 to 40. A FSR may contribute to financial stability, increase accountability of authorities responsible for financial stability, and strengthen co-operation between the various authorities. The occurrence of a banking crisis in the past, income per capita, and European Union membership increase the likelihood that a FSR is published. The content of FSRs differs widely; on average only 33% of the indicators as suggested by the IMF is actually published. The amount of information provided seems unrelated to the health of the banking system.