## Figure 1.30. Global Financial Dislocation Scenario

## Source details

**Canonical URL:** [Figure 1.30. Global Financial Dislocation Scenario](https://www.imf.org/-/media/files/publications/gfsr/2017/october/chapter-1/pdf-data/figure1-30.pdf)

## Other formats

- [Markdown version](/-/media/files/publications/gfsr/2017/october/chapter-1/pdf-data/figure1-30.pdf.md)
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### Scenario summary
- Financial stability risks build up for two more years, as equity and house prices continue to rise amid low volatility and narrow spreads, followed by an eventual sharp repricing.
- Monetary policy responses are limited by policy space in some countries.
- A decompression of risk premiums leads to an abrupt deleveraging.
- Output losses are broad-based.
- Rising defaults reduce capital at banks.

### Panel variables and axis values (as presented)
- 1. Price of Equity
  - Axis ticks and labels shown: –15, –10, –5, 0, 5, 10
  - Time axis shown: 2017, 18, 19, 20, 21, 22
- 2. Price of Housing
  - Axis ticks and labels shown: –6, –4, –2, 0, 2, 4
  - Time axis shown: 2017, 18, 19, 20, 21, 22
- 3. Nominal Policy Interest Rate
  - Axis ticks and labels shown: –2, –1, 0, 1
  - Time axis shown: 2017, 18, 19, 20, 21, 22
- 4. Mortgage and Corporate Debt
  - Axis ticks and labels shown: –2.0, –0.5, –1.0, –1.5, 0.0, 0.5, 1.0, 1.5
  - Time axis shown: 2017, 18, 19, 20, 21, 22
- 5. Output Losses
  - Countries shaded by output loss magnitudes:
    - smaller than 1.8 percent of GDP (“low impact”)
    - between 1.8 percent and 2.3 percent of GDP (“medium impact”)
    - greater than 2.3 percent of GDP (“high impact”)
- 6. Reductions in Bank Capital Ratios
  - Thresholds for reductions in bank capital ratios:
    - smaller than 0.625 percentage points (“low impact”)
    - between 0.625 and 0.675 percentage points (“medium impact”)
    - greater than 0.675 percentage points (“high impact”)

### Regional and debt-category distinctions shown
- Regions/categories labeled in the figure:
  - Euro area
  - United States
  - China
  - Other advanced economies
  - Other emerging market economies
- Debt categories indicated:
  - Mortgage debt: median country
  - Corporate debt: median country
- Debt-risk groupings indicated:
  - High
  - Medium
  - Low

*Source: IMF staff estimates.*

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_Source: https://www.imf.org/-/media/files/publications/gfsr/2017/october/chapter-1/pdf-data/figure1-30.pdf_