Based on a multiple indicator approach, this Special Feature takes a first step towards statistically identifying banking institutions that meet certain "largeness" characteristics that go beyond balance sheet size. Information extracted from credit default swap (CDS) index tranches can provide an important contribution to a forward-looking assessment of banking system risk. The market prices of CDS index tranches provide the basis for constructing an indicator of the level of systematic risk in the credit market. In particular, this indicator describes traders’ views on the future relative development of systematic and idiosyncratic portfolio credit risk. Thus, it shows whether traders are more concerned about economy-wide credit risk or about firm-specific credit risk such as the default of a particular firm. This Special Feature constructs an estimate of the implied correlation for the euro credit market and describes its use in financial stability analysis. The three main results of this analysis are as follows. First, after January 2006, there was evidence that the focus of credit traders had moved from firm specific credit risk towards systematic credit risk. This finding can be linked to a number of fundamental determinants of credit market valuation, all of which point in the same direction. Second, the implied correlation provides detailed information about how the credit markets functioned during the May 2005 market turbulence. Third, most of the variation in the implied correlation is not linked to other financial market indicators. Credit growth has accelerated in recent years in some central and (south-) eastern European countries (CEECs). While low starting levels of financial intermediation help explain the speed of credit growth, its fast pace could raise concerns from a financial and macroeconomic stability perspective. This Special Feature suggests a methodology for analysing these episodes that explicitly accounts for both macroeconomic developments and the catching up process associated with the transition from planned to market economies that countries in the region have been undergoing. However, even if both factors are taken into account evidence is still found in some countries of higher credit growth than the empirical model would suggest. In these cases the dynamics of credit growth are nevertheless not markedly different for foreign or domestic currency lending, or for lending to households and corporations. Given the limited available data, however, these results must be interpreted with caution, and further research is called for to address issues such as the mechanisms through which the exchange rate regime, the presence of foreign banks and the range of lending products on offer may impact credit developments in the region. If very large changes in the stock prices of individual insurance undertakings tend to occur simultaneously, it can be said that extreme-value dependence is present. If such dependence is found to be present, it can indicate that these firms are exposed to common sources of risk. With a focus on gaining insight into systemic risk within the insurance sector, this Special Feature examines the incidence of extreme-value dependence across different types of insurance undertakings and it goes on to examine the main drivers of such co-movement, to the extent that it is present. A key finding is that extreme-value dependence is evident among larger composite insurers. In addition, two important drivers of extreme-value dependence between insurance companies are found: exposure to extreme financial market events, and to non-life underwriting. Since the introduction of the euro, the progress made in the integration of financial markets and market infrastructures in the EU, the growing number of internationally active institutions and the diversification of financial activities have increased the liquidity and efficiency of the relevant markets. At the same time, however, such developments have also increased the likelihood that systemic disturbances could affect more than one Member State, and possibly increase the scope for cross-border contagion. In this context, the specific arrangements for handling crises at the EU level between the authorities responsible for safeguarding financial stability have been considerably enhanced since the introduction of the euro. The enhancements include legislative initiatives in the framework of the Financial Services Action Plan (FSAP), the implementation of the Lamfalussy framework for regulation and supervision in all financial sectors, the adoption of agreements on voluntary cooperation between responsible authorities, and the development of practical arrangements, such as the organisation of financial crisis simulation exercises. This Special Feature provides a structured overview of the progress made in the specific arrangements for financial crisis management between central banks, banking supervisors and finance ministries. Arrangements involving other authorities, such as other sectoral financial supervisors or deposit-insurance schemes, are not dealt with in this Special Feature. In the three years prior to the end of 2005, net inflows into the hedge fund sector were particularly strong, averaging USD 20 billion per quarter. However, net outflows in the last quarter of 2005 warned many hedge fund managers of the possibility of higher withdrawals in the future. This also raised questions about the factors that drive money flows into the hedge fund industry.