Statistical indicators for measuring residential property price valuations offer intuitive appeal and ease of construction, but may fail to capture important fundamental factors. By contrast, model-based approaches offer the advantage that they can explore a wider set of fundamental factors in a multivariate regression framework, but still can only go so far in capturing the symbiotic relationship between housing, rental and mortgage markets. Boom-bust cycles in financial variables such as credit volumes and residential property prices play an important role in the build-up of financial instability and subsequent financial crises. Against this background, one of the key goals of macroprudential policy is to attenuate such boom-bust cycles, often termed the financial cycle. To inform such policies, various recent studies have presented estimates of cyclical fluctuations in financial indicators for major advanced economies. A reassessment of global economic growth prospects has been under way since late 2014, as economic activity in emerging markets has receded from the strong growth seen over the last years. A key focus in this regard has been China, not only given its sheer size and growing role in international trade and finance, but also given the uncertainties related to the country’s ongoing rebalancing from an investment and export-driven to a consumption-led growth model. The correction in Chinese stock markets in the third quarter of this year sparked a pronounced rise in uncertainty which was pervasive enough to have significant global effects, including on euro area financial stability. Indeed, developments in China could affect the euro area in multiple ways from a financial stability perspective, including via trade, commodity and financial channels, which may work either directly or indirectly. The Basel III leverage ratio aims to constrain the build-up of excessive leverage in the banking system and to enhance bank stability. Concern has been raised, however, that the non-risk-based nature of the leverage ratio could incentivise banks to increase their risk-taking. This special feature presents theoretical considerations and empirical evidence for EU banks that a leverage ratio requirement should only lead to limited additional risk-taking relative to the induced benefits of increasing loss-absorbing capacity, thus resulting in more stable banks. The current environment of protracted low interest rates poses major challenges to euro area insurance companies. This special feature discusses how a prolonged low-yield period might affect the profitability and the solvency of euro area insurers. In the article, it is argued that if interest rates were to stay low for a long time, this could have material implications for the profitability and the solvency of many insurers. However, it is also shown that the impact of low interest rates is likely to differ markedly across insurance companies depending on their business model and balance sheet structure. In particular, the impact is expected to be highest for small and medium-sized life insurers with large government bond portfolios and high guarantees to policyholders that reside in countries where these guarantees are rigid and where contracts embed a long time to maturity. This special feature proposes a methodology to measure systemic risk as the percentage of banks defaulting simultaneously over a given time horizon for a given confidence level. The framework presented here is applied to euro area banks. It is observed that since the announcement of the comprehensive assessment in October 2013 banks have significantly reshuffled their security portfolios. This has resulted in a decline in the probability of systemic events occurring. In a monetary union, targeted national macroprudential policies can be necessary to address asymmetric financial developments that are outside the scope of the single monetary policy. This special feature discusses and, using a two-country structural model, provides some model-based illustrations of the strategic interactions between a single monetary policy and jurisdiction-specific macro-prudential policies. Counter-cyclical macro-prudential interventions are found to be supportive to monetary policy conduct through the cycle. This complementarity is significantly reinforced when there are asymmetric financial cycles across the monetary union. The global financial crisis has highlighted that impaired financial institutions can significantly propagate aggregate or institution-specific stress to the overall economy. With financial contagion a key conduit of these impacts, data at the individual firm level are crucial to account for both cross-firm and macro-financial linkages. While traditional stress-testing methods offer considerable insights into these interdependencies, their findings can be complemented by the use of reduced-form models that exploit past empirical regularities. One such framework, drawing on the infinite-dimensional vector autoregressive (IVAR) framework of Chudik and Pesaran, includes both firm-level risk indicators and a global set of macroeconomic variables. This approach offers a means of linking firm-level default probabilities to aggregate international macro-financial variables. Excessive leverage is a key contributor to systemic stress.