The European Central Bank published a working paper introducing the Severity and Probability Of Triggers indicator, or SPOT, which uses large language models to extract forward-looking financial stability signals from news. Applied to more than 1 million Financial Times articles from January 2005 to May 2026, the framework assesses potential triggers by their probability, severity, expected timing and source, then aggregates these assessments into an expected-impact indicator. SPOT rose around major stress events including the global financial crisis, the euro area sovereign debt crisis, the COVID-19 pandemic and Russia’s invasion of Ukraine, while source-level analysis identified the changing roles of financial market, macroeconomic and geopolitical triggers. In euro area growth-at-risk models, SPOT improved model fit by more than 6% at the one-quarter horizon and 10% at the one-year horizon, outperforming commonly used measures of financial stress, geopolitical risk, policy uncertainty and volatility. Combining SPOT with financial vulnerability indicators improved performance by around a further 2 percentage points, indicating amplification between triggers and existing vulnerabilities.
European Central Bank2026-07-29
European Central Bank working paper develops AI-based SPOT indicator to assess financial stability triggers
A European Central Bank working paper introduces SPOT, an AI-based indicator that measures the probability and severity of potential financial stability triggers using financial news. The indicator rose around major historical stress events and improved euro area growth-at-risk model fit by more than 6% at the one-quarter horizon and 10% at the one-year horizon.