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conseąuences for the real economy. Fundamental to the definition is the notion of negative extemalities from a disruption or failure in a financial institution, market, or instrument. Ali types of financial intermediaries, markets, and infra-structure can potentially be systemically important to some degree”¹.

Table 1

The Elements of Systemie Risk

1	Variety of origins
2	Variety of fonns and manifestations
3	Independency of time - systemie risk is not bound to a certain phase of economic cycle
4	Independency of space - systemie risk is not bound to a distinct geographical location. it is not confined to national boundaries - it can appear anywhere
5	Independency of type of institutions
6	Independency of different types of financial activities
7	Dynamie, rapid development. according to the circumstances
8	The conseąuences of systemie risk differ - they depend on existing condi-tions/circumstances

Source: V.P.

In the last Annual report of BIS, an amplified definition is used: “Systemie financial risk can be defined as the risk of disruption to financial services that results from an impairment of the financial system, with the potential to harm the real economy. It can arise anywhere in the financial system and may be amplified as market participants overreact to incomplete or incorrect infor-mation. How this risk is distributed across entities and sectors depends on the structure of balance sheet linkages, which can be complex”^{2 3}.

The above definitions define “ąuality”, however, they are not operational for practical use. Systemie risk has to be measured to be able to use the measurement result for regulation and supervision of different institutions. Systemie risk, unless it is measured, is “an elusive concept: it can have significant economic conseąuences and it is quantitatively important, yet there is no elear consensus on how it should be measured^,,?.

At present, different approaches to systemie risk measurement can be found in a vast literaturę on this topie. There are two main streams: 1. The adherers to the first stream considered the system as a portfolio of institutions, and search

1

   Overall Systemically Important Financial Institutions (discussed at g20). 12.05.2011.

2

   Annual Report. 1 April 2010-31 March 2011. Bank for International Settlements. Basel. 26 June 2011. p. 76, 83, 106-107. Ar20Ile.

3

   Ibid.