Statement from Marcus A. Burnett
Chief Executive Officer, SOFR Academy, Inc.
October, 2025
The recent disclosures of credit losses among Regional and mid-sized U.S. banking institutions serve as a timely reminder of the need to further strengthen the resilience of the financial system. These institutions perform an essential role in the provision of credit to households, small businesses, and local communities. A banking system that becomes increasingly polarized—dominated by a handful of large money-center banks at one end and small community banks at the other, with a diminishing middle tier—is not conducive to financial stability or balanced economic growth. The strength and resilience of regional and mid-sized banks are therefore of critical importance, particularly as funding conditions could tighten if credit stresses were to emerge more broadly.
IOSCO-aligned SOFR-supplements such as the Across-the-Curve Credit Spread Index (AXI) and the Financial Conditions Credit Spread Index (FXI) will help address these challenges and enhance the resilience of Regional and mid-sized banks. By providing transparent, transaction-based measures of credit conditions across the yield curve, these indices enable supervisors, policymakers, and market participants to better identify emerging stresses, manage risk, calibrate liquidity facilities, and strengthen the transmission of monetary policy—including at the intersection of banks and non-bank lenders. By improving visibility into funding conditions, AXI and FXI support a more stable and competitive environment in which regional banks can continue to perform their critical role in credit intermediation, even during periods of market volatility.
Enhancing transparency in credit-spread dynamics supports a more balanced and robust financial system—one in which institutions of all sizes can extend credit with confidence, even under conditions of market strain. These developments underscore the importance of our work to promote financial stability through data-driven and market-aligned benchmark credit spreads for SOFR.
ABOUT THE AUTHOR
Marcus A. Burnett is the Chief Executive Officer of SOFR Academy ([email protected]).
This note is provided for informational purposes by SOFR Academy, Inc. (Sofr.org), a financial engineering firm. This note is not designed to be taken as advice or a recommendation for any investment decision or strategy. Readers should make an independent assessment of relevant economic, legal, regulatory, tax, credit, and accounting considerations and determine, together with their own professionals and advisers, if the use of any index is appropriate to their goals. Neither the USD Across-the-Curve Credit Spread Index (AXI), nor the USD Financial Conditions Credit Spread Index (FXI) are associated with or sponsored by the Federal Reserve Bank of New York or the Federal Reserve system. Additional information about SOFR Academy, AXI and FXI can be found here.
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