IMF Working Papers

Defining Financial Stability

By Garry J. Schinasi

October 1, 2004

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Format: Chicago

Garry J. Schinasi "Defining Financial Stability", IMF Working Papers 2004, 187 (2004), accessed July 9, 2025, https://doi.org/10.5089/9781451859546.001

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Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

The main objective of this paper is to propose a definition of financial stability that has some practical and operational relevance. Financial stability is defined in terms of its ability to facilitate and enhance economic processes, manage risks, and absorb shocks. Moreover, financial stability is considered a continuum: changeable over time and consistent with multiple combinations of the constituent elements of finance. The paper also discusses several practical implications of the definition that should be considered when using it for policy analysis or developing an analytical framework.

Subject: Financial sector stability

Keywords: Economic process, Economy, Finance, Financial system, Market, WP

Publication Details

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