Front Matter

Front Matter

International Monetary Fund. Monetary and Capital Markets Department
Published Date:
October 2018
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©2018 International Monetary Fund

Cover and Design: Luisa Menjivar and Jorge Salazar

Composition: AGS, An RR Donnelley Company

Cataloging-in-Publication Data

IMF Library

Names: International Monetary Fund.

Title: Global financial stability report.

Other titles: GFSR | World economic and financial surveys, 0258–7440

Description: Washington, DC : International Monetary Fund, 2002- | Semiannual | Some issues also have thematic titles. | Began with issue for March 2002.

Subjects: LCSH: Capital market—Statistics—Periodicals. | International finance—Forecasting—Periodicals. | Economic stabilization—Periodicals.

Classification: LCC HG4523.G557

ISBN 978-1-48437-559-4 (Paper)

978-1-48437-676-8 (ePub)

978-1-48437-677-5 (Mobipocket)

978-1-48437-682-9 (PDF)

Disclaimer: The Global Financial Stability Report (GFSR) is a survey by the IMF staff published twice a year, in the spring and fall. The report draws out the financial ramifications of economic issues highlighted in the IMF’s World Economic Outlook (WEO). The report was prepared by IMF staff and has benefited from comments and suggestions from Executive Directors following their discussion of the report on September 20, 2018. The views expressed in this publication are those of the IMF staff and do not necessarily represent the views of the IMF’s Executive Directors or their national authorities.

Recommended citation: International Monetary Fund. 2018. Global Financial Stability Report—A Decade after the Global Financial Crisis: Are We Safer? Washington, DC, October.

Please send orders to:

International Monetary Fund, Publications Services

P.O. Box 92780, Washington, DC 20090, U.S.A.

Tel.: (202) 623–7430 Fax: (202) 623–7201



Assumptions and Conventions

The following conventions are used throughout the Global Financial Stability Report (GFSR):

… to indicate that data are not available or not applicable;

—to indicate that the figure is zero or less than half the final digit shown or that the item does not exist;

– between years or months (for example, 2017–18 or January–June) to indicate the years or months covered, including the beginning and ending years or months;

/between years or months (for example, 2017/18) to indicate a fiscal or financial year.

“Billion” means a thousand million.

“Trillion” means a thousand billion.

“Basis points” refers to hundredths of 1 percentage point (for example, 25 basis points are equivalent to ¼ of 1 percentage point).

If no source is listed on tables and figures, data are based on IMF staff estimates or calculations.

Minor discrepancies between sums of constituent figures and totals shown reflect rounding.

As used in this report, the terms “country” and “economy” do not in all cases refer to a territorial entity that is a state as understood by international law and practice. As used here, the term also covers some territorial entities that are not states but for which statistical data are maintained on a separate and independent basis.

The boundaries, colors, denominations, and any other information shown on the maps do not imply, on the part of the International Monetary Fund, any judgment on the legal status of any territory or any endorsement or acceptance of such boundaries.

Further Information

Corrections and Revisions

The data and analysis appearing in the Global Financial Stability Report are compiled by the IMF staff at the time of publication. Every effort is made to ensure their timeliness, accuracy, and completeness. When errors are discovered, corrections and revisions are incorporated into the digital editions available from the IMF website and on the IMF eLibrary (see below). All substantive changes are listed in the online tables of contents.

Print and Digital Editions

Print copies of this Global Financial Stability Report can be ordered at

The Global Financial Stability Report is featured on the IMF website at This site includes a PDF of the report and data sets for each of the charts therein.

The IMF eLibrary hosts multiple digital editions of the Global Financial Stability Report, including ePub, enhanced PDF, Mobi, and HTML:

Copyright and Reuse

Information on the terms and conditions for reusing the contents of this publication are at


The Global Financial Stability Report (GFSR) assesses key risks facing the global financial system. In normal times, the report seeks to play a role in preventing crises by highlighting policies that may mitigate systemic risks, thereby contributing to global financial stability and the sustained economic growth of the IMF’s member countries.

The analysis in this report has been coordinated by the Monetary and Capital Markets (MCM) Department under the general direction of Tobias Adrian, Director. The project has been directed by Fabio Natalucci and Dong He, both Deputy Directors, as well as by Claudio Raddatz and Anna Ilyina, both Division Chiefs. It has benefited from comments and suggestions from the senior staff in the MCM Department.

Individual contributors to the report are Sergei Antoshin, Prasad Ananthakrishnan, Adolfo Barajas, Peter Breuer, Jeroen Brinkhoff, John Caparusso, Sally Chen, Yingyuan Chen, Fabio Cortes, Marc Dobler, J. Benson Durham, Dimitris Drakopoulos, Martin Edmonds, Alan Xiaochen Feng, Rohit Goel, Evrim Bese Goksu, Pierpaolo Grippa, Dirk Jan Grolleman, Tryggvi Gudmundsson, Sanjay Hazarika, Frank Hespeler, Henry Hoyle, Mohamed Jaber, David Jones, Will Kerry, Piyusha Khot, Robin Koepke, Yumi Kuramochi, Yang Li, Alejandro Lopez Mejia, Sheheryar Malik, Rebecca McCaughrin, Aditya Narain, Huyen Ngoc Phuong Nguyen, Tomas Piontek, Mustafa Saiyid, Luca Sanflippo, Jochen Schmittmann, Katharine Seal, Juan Solé, Ilan Solot, Richard Stobo, Florina Tanase, Nour Tawk, Nico Valckx, Constant Verkoren, James P. Walsh, Froukelien Wendt, Jeffrey Williams, Peter Windsor, Juno Xinze Yao, and Akihiko Yokoyama. Magally Bernal, Claudia Cohen, Breanne Rajkumar, and Han Zaw were responsible for word processing.

Gemma Diaz from the Communications Department led the editorial team and managed the report’s production with support from Linda Kean and editorial assistance from Sherrie Brown, Lucy Scott Morales, Nancy Morrison, Katy Whipple, AGS, and Vector Talent Resources.

This issue of the GFSR draws in part on a series of discussions with banks, securities firms, asset management companies, hedge funds, standards setters, financial consultants, pension funds, central banks, national treasuries, and academic researchers.

This GFSR reflects information available as of September 14, 2018. The report benefited from comments and suggestions from staff in other IMF departments, as well as from Executive Directors following their discussion of the GFSR on September 20, 2018. However, the analysis and policy considerations are those of the IMF staff and should not be attributed to Executive Directors or their national authorities.


Ten years since the failure of Lehman Brothers the global economy continues to grow and progress toward a safer global financial system is undeniable. New supervisory and regulatory standards, tools, and practices have been developed and implemented across the globe. Banks are now stronger because the quality and quantity of capital has increased steadily, and minimum liquidity standards have been phased in around the world. Supervisory stress testing has been broadly adopted, and many jurisdictions now have macroprudential frameworks and policy tools with which to address systemic risks. Many shadow-banking activities that contributed to the global financial crisis have been curtailed or transformed into safer market-based finance.

So, looking back, a new financial architecture has been put in place, a testament to the resolve of policymakers to work together internationally to avoid a repeat of the Great Depression. But is the financial system safe enough? Looking ahead, clouds appear on the horizon. The global economic recovery has been uneven and inequality has risen, fueling inward-looking policies and contributing to increased policy uncertainty. Trade tensions have emerged, and a further escalation may damage market sentiment and significantly harm global growth. Support for multilateralism has been waning, a dangerous undercurrent that may undermine confidence in policymakers’ ability to respond to future crises. Nonetheless, despite trade tensions and continued monetary policy normalization in a few advanced economies, global financial markets have remained buoyant and appear complacent about the risk of a sudden, sharp tightening in financial conditions.

A combination of rising U.S. interest rates, a stronger dollar, and the intensification of trade tensions have already led to market pressures and capital outflows in some emerging market economies. The most vulnerable countries have faced a difficult market environment, experiencing large currency depreciations, difficulties in rolling over external debt, and sharp reversals of portfolio flows. Although emerging market exchange rates have become more correlated recently, stress has continued to be largely idiosyncratic, and there is little evidence of broader spillovers to the asset class at this point. Robust global risk appetite has so far masked the challenges emerging markets may face should global financial conditions suddenly tighten sharply. In that eventuality, the risk of contagion to the broader emerging market universe could ensue, highlighting the importance of avoiding complacency.

A more significant tightening in global financial conditions will expose financial vulnerabilities that have built over the years and will test the resilience of the global financial system. The ratio of total non-financial sector debt to GDP in jurisdictions with systemically important financial sectors stands at an all-time high of 250 percent, asset valuations remain stretched across several sectors and regions, and underwriting standards are deteriorating, including in many segments of market-based finance. A new market structure has emerged in the decade since the crisis. The resilience of market liquidity provision in the new institutional environment has yet to be tested under more adverse conditions, and it will affect the ability of the financial system to absorb, rather than propagate, an adverse shock.

As clouds gather on the horizon, it is crucial for countries around the world to complete and implement the global regulatory reform agenda and to resist the call to roll back reforms. To counteract rising vulnerabilities, macro- and microprudential policies should be developed and deployed, as warranted. For example, more active use of countercyclical capital buffers may have merit at this juncture. Prudential regulation and supervision need to remain attentive to, and lean against, emerging risks, including those related to cyberthreats, new technologies, and other risky activities thriving outside the regulatory perimeter. International cooperation is crucial for maintaining global financial stability and fostering sustainable economic growth. The IMF remains a key player for promoting cooperative financial policies.

Tobias Adrian

Financial Counsellor

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