A Decade after the Global Financial Crisis: Are We Safer?

Global Financial Stability Report, October 2018

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A Decade after the Global Financial Crisis: Are We Safer?

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Bibliographic details

• Published: October 3, 2018

Near-term financial stability risks

• Global near-term risks to financial stability have increased somewhat, reflecting mounting pressures in emerging market economies and escalating trade tensions.
• These near-term risks, while still moderate, could increase significantly if any of the following materialize:
  • An intensification of concerns about emerging markets.
  • A broader rise in trade tensions.
  • The realization of political and policy uncertainty.
  • A faster-than-expected tightening in monetary normalization.
• Any of the above could lead to a sharp tightening in financial conditions.

Medium-term vulnerabilities

• Medium-term financial stability risks remain elevated, driven by:
  • High nonfinancial sector leverage in advanced economies.
  • Rising external borrowing in emerging market economies.
• The global banking system is stronger than before the crisis but is exposed to:
  • Highly indebted borrowers.
  • Opaque and illiquid assets.
  • Foreign currency rollover risks.
• These vulnerabilities raise urgency for policymakers to boost resilience by completing financial regulatory reform and developing and deploying macroprudential policy tools.

Regulatory reform 10 years after the crisis

• The GFSR takes stock of global regulatory reform 10 years after the global financial crisis:
  • Reviews main precrisis failings in financial sector oversight.
  • Assesses progress in implementation of the reform agenda designed to address those failings.
  • Examines whether shifts in market structure and risks have moved toward greater safety as intended by the new regulatory agenda.
• Key findings on reform progress:
  • The broad agenda set by the international community has given rise to new standards that have contributed to a more resilient financial system—one that is less leveraged, more liquid, and better and more intensively supervised, especially at large banks.
  • Forms of shadow banking more closely related to the global financial crisis have been curtailed.
  • Most countries now have macroprudential authorities and some tools to oversee and contain systemic risks.
• Areas needing consolidation or further progress:
  • Completing implementation of the leverage ratio.
  • Ensuring adequate toolkits for containing systemic risk.
• Cautions and forward-looking priorities:
  • The chapter warns against rolling back reforms, which might make the global financial system less safe.
  • Regulators and supervisors must remain attentive to new risks, including fintech and cybersecurity, and continue vigilance on the perimeter of prudential regulation.
  • Evaluation of the impact of reforms is advisable.

Chapters, analytical components, and supporting material (as listed)

• Chapters:
  • Chapter 1: A Decade after the Global Financial Crisis: Are We Safer?
  • Chapter 2: Regulatory Reform 10 Years after the Global Financial Crisis: Looking Back, Looking Forward
• Analytical focus items and data included:
  • Global Financial Stability Assessment
  • Fragilities in Emerging and Frontier Markets
  • Banks—Stronger, but Not Yet Out of the Woods
  • Policies to Safeguard Financial Stability
  • Special Feature: International Banking Groups—Centralized versus Decentralized Business Models
• Figures and charts (selected listings as presented):
  • 1.1. Recent Market Developments
  • 1.2. The Global Financial Conditions
  • 1.3. Growth-at-Risk Approach
  • 1.4. The Growth-at-Risk Estimates
  • 1.5. Impact of U.S.-China Trade Tensions on Asset Prices
  • 1.6. Balance Sheet Vulnerabilities
  • 1.7. Balance-Sheet Leverage Metrics by Sector and Region
  • 1.8. China: Deleveraging and De-risking Progress
  • 1.9. Asset Valuations
  • 1.10. Emerging Markets: Portfolio Flows and Asset Market Performance
  • 1.11. Emerging Market and Developing Economies: Financial Conditions and GDP Growth
  • 1.12. Investor Differentiation among Emerging Markets
  • 1.13. Frontier Markets: Bond Issuance and Redemptions
  • 1.14. Emerging Markets: Key Risks and Vulnerabilities
  • 1.15. Emerging Market Vulnerabilities to Portfolio Flow Reversals
  • 1.16. Emerging Market Vulnerabilities
  • 1.17. Reserve Buffers and Potential Foreign Exchange Liquidity Needs
  • 1.18. The Investor Base for Emerging Market Sovereign and Corporate Debt
  • 1.19. Market Size and Domestic Investor Base
  • 1.20. Banking Sector Resilience
  • 1.21. Banking System Exposures to the Nonfinancial Sector
  • 1.22. Bank Exposures to Opaque and Illiquid Assets, Interconnectedness, and Funding
  • 1.23. Availability of Macroprudential Tools for Addressing Key Vulnerabilities
• Special Features and Boxes:
  • Special Features 1.SF.1–1.SF.3 covering foreign banking offices, branch and subsidiary balance sheet structures (End-2017), and liquidity/lending/intragroup positions of foreign bank branches.
  • Boxes include topics such as the U.S. yield curve slope, escalating trade tensions and Growth at Risk, Brexit financial stability considerations, jumps and liquidity in the U.S. stock market, trading activity in China’s bond market, and correspondent banking relationships.
• Online annexes and technical notes:
  • Text 1.1. Technical Note
  • Chapter 2 annexes and analyses covering housing, credit, securitization, capital requirements, procyclicality, liquidity, banking concentration, macroprudential frameworks, perceptions of bailouts, new sources of risk, the IMF's role, the Data Gaps Initiative, resolution reforms, and banking sector indicators (including figures noted as End-2017).

Source: October 2018 Global Financial Stability Report (GFSR), "A Decade after the Global Financial Crisis: Are We Safer?"

Content in this bundle

• Figure 1.2.1. Trade Tensions Scenario Analysis Using the Growth-at-Risk Approach
  • Figure 1.2.1. Trade Tensions Scenario Analysis Using the Growth-at-Risk Approach (Markdown version)
  • Figure 1.2.1. Trade Tensions Scenario Analysis Using the Growth-at-Risk Approach (CSV)
• Figure 1.4.1. Jumps and U.S. Stock Market Liquidity
  • Figure 1.4.1. Jumps and U.S. Stock Market Liquidity (Markdown version)
  • Figure 1.4.1. Jumps and U.S. Stock Market Liquidity (CSV)
• box-figure-1-6-1
  • box-figure-1-6-1 (Markdown version)
  • box-figure-1-6-1 (CSV)
• figure1-10 — Emerging Markets: Portfolio Flows and Asset Market Performance
  • figure1-10 — Emerging Markets: Portfolio Flows and Asset Market Performance (Markdown version)
  • figure1-10 — Emerging Markets: Portfolio Flows and Asset Market Performance (CSV)
• Figure 1.11. Emerging Market and Developing Economies: Financial Conditions and GDP Growth
  • Figure 1.11. Emerging Market and Developing Economies: Financial Conditions and GDP Growth (Markdown version)
  • Figure 1.11. Emerging Market and Developing Economies: Financial Conditions and GDP Growth (CSV)
• Figure 1.12. Investor Differentiation among Emerging Markets
  • Figure 1.12. Investor Differentiation among Emerging Markets (Markdown version)
  • Figure 1.12. Investor Differentiation among Emerging Markets (CSV)
• Figure 1.15. Emerging Market Vulnerabilities to Portfolio Flow Reversals
  • Figure 1.15. Emerging Market Vulnerabilities to Portfolio Flow Reversals (Markdown version)
  • Figure 1.15. Emerging Market Vulnerabilities to Portfolio Flow Reversals (CSV)
• figure1-16
  • figure1-16 (Markdown version)
  • figure1-16 (CSV)
• Figure 1.17. Reserve Buffers and Potential Foreign Exchange Liquidity Needs
  • Figure 1.17. Reserve Buffers and Potential Foreign Exchange Liquidity Needs (Markdown version)
  • Figure 1.17. Reserve Buffers and Potential Foreign Exchange Liquidity Needs (CSV)
• Figure 1.18. The Investor Base for Emerging Market Sovereign and Corporate Debt
  • Figure 1.18. The Investor Base for Emerging Market Sovereign and Corporate Debt (Markdown version)
  • Figure 1.18. The Investor Base for Emerging Market Sovereign and Corporate Debt (CSV)
• Figure 1.19. Market Size and Domestic Investor Base
  • Figure 1.19. Market Size and Domestic Investor Base (Markdown version)
  • Figure 1.19. Market Size and Domestic Investor Base (CSV)
• Dataset overview: figure1-2
  • Dataset overview: figure1-2 (Markdown version)
  • Dataset overview: figure1-2 (CSV)
• Figure 1.20. Banking Sector Resilience
  • Figure 1.20. Banking Sector Resilience (Markdown version)
  • Figure 1.20. Banking Sector Resilience (CSV)
• Figure 1.21. Banking System Exposures to the Nonfinancial Sector
  • Figure 1.21. Banking System Exposures to the Nonfinancial Sector (Markdown version)
  • Figure 1.21. Banking System Exposures to the Nonfinancial Sector (CSV)
• Figure 1.22. Bank Exposures to Opaque and Illiquid Assets, Interconnectedness, and Funding
  • Figure 1.22. Bank Exposures to Opaque and Illiquid Assets, Interconnectedness, and Funding (Markdown version)
  • Figure 1.22. Bank Exposures to Opaque and Illiquid Assets, Interconnectedness, and Funding (CSV)
• figure1-3
  • figure1-3 (Markdown version)
  • figure1-3 (CSV)
• Figure 1.4. The Growth-at-Risk Estimates
  • Figure 1.4. The Growth-at-Risk Estimates (Markdown version)
  • Figure 1.4. The Growth-at-Risk Estimates (CSV)
• Figure 1.5. Impact of US-China Trade Tensions on Asset Prices
  • Figure 1.5. Impact of US-China Trade Tensions on Asset Prices (Markdown version)
  • Figure 1.5. Impact of US-China Trade Tensions on Asset Prices (CSV)
• dataset overview
  • dataset overview (Markdown version)
  • dataset overview (CSV)
• Figure 1.8. China: Deleveraging and De-risking Progress
  • Figure 1.8. China: Deleveraging and De-risking Progress (Markdown version)
  • Figure 1.8. China: Deleveraging and De-risking Progress (CSV)
• Figure 1.9. Asset Valuations
  • Figure 1.9. Asset Valuations (Markdown version)
  • Figure 1.9. Asset Valuations (CSV)
• Figure 1.SF.1. Indicators of the Importance of Foreign Banking Offices
  • Figure 1.SF.1. Indicators of the Importance of Foreign Banking Offices (Markdown version)
  • Figure 1.SF.1. Indicators of the Importance of Foreign Banking Offices (CSV)
• Figure 1.SF.3. Liquidity, Lending, and Intragroup Positions of Foreign Bank Branches
  • Figure 1.SF.3. Liquidity, Lending, and Intragroup Positions of Foreign Bank Branches (Markdown version)
  • Figure 1.SF.3. Liquidity, Lending, and Intragroup Positions of Foreign Bank Branches (CSV)
• Figure 1.SF.2. Foreign Bank Branches and Subsidiaries: Balance Sheet Structures
  • Figure 1.SF.2. Foreign Bank Branches and Subsidiaries: Balance Sheet Structures (Markdown version)
  • Figure 1.SF.2. Foreign Bank Branches and Subsidiaries: Balance Sheet Structures (CSV)
• IMF Global Financial Stability Report October 2018 Online Annex 1.1 Technical Note1
  • IMF Global Financial Stability Report October 2018 Online Annex 1.1 Technical Note1 (Markdown version)
  • IMF Global Financial Stability Report October 2018 Online Annex 1.1 Technical Note1 (PDF)
• IMF Global Financial Stability Report October 2018 Assumptions and converntions
  • IMF Global Financial Stability Report October 2018 Assumptions and converntions (Markdown version)
  • IMF Global Financial Stability Report October 2018 Assumptions and converntions (PDF)
• IMF Global Financial Stability Report October 2018 IMF EXECUTIVE BOARD DISCUSSION SUMMARY
  • IMF Global Financial Stability Report October 2018 IMF EXECUTIVE BOARD DISCUSSION SUMMARY (Markdown version)
  • IMF Global Financial Stability Report October 2018 IMF EXECUTIVE BOARD DISCUSSION SUMMARY (PDF)
• Chapter 1
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• Foreword
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• Further Info
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• Preface
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• IMF Global Financial Stability Report October 2018 Chapter One executive summary
  • IMF Global Financial Stability Report October 2018 Chapter One executive summary (Markdown version)
  • IMF Global Financial Stability Report October 2018 Chapter One executive summary (PDF)
• Full Report
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• 110566.Figure 1.2.1
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• 110566.Figure 1.4.1
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• 110566.Figure 1.5.1
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• 110566.Figure 1.6.1
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• 110566.Figure 1.1
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• Figure1_15
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• 110566.Figure 1.16
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• 110566.Figure 1.17
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• 110566.Figure 1.19
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• 110566.Figure 1.2
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• 110566.Figure 1.20
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• 110566.Figure 1.21
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• 110566.Figure 1.22
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• 110566.Figure 1.23
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• 110566.Figure 1.3
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• 110566.Figure 1.4
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• 110566.Figure 1.5
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• 110566.Figure 1.6
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• 110566.Figure 1.7
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• 110566.Figure 1.8
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• 110566.Figure 1.9
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• 110566.Figure 1.SF.1
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• 110566.Figure 1.SF.2
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• 110566.Figure 1.SF.3
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• figure2-2
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• Figure 2.3. Procyclicality: Regulatory Tools, Outcomes, and IMF Technical Assistance
  • Figure 2.3. Procyclicality: Regulatory Tools, Outcomes, and IMF Technical Assistance (Markdown version)
  • Figure 2.3. Procyclicality: Regulatory Tools, Outcomes, and IMF Technical Assistance (XLSX)
• Figure 2.4. Overview of Postcrisis Regulatory Progress in Liquidity
  • Figure 2.4. Overview of Postcrisis Regulatory Progress in Liquidity (Markdown version)
  • Figure 2.4. Overview of Postcrisis Regulatory Progress in Liquidity (XLSX)
• figure2-5
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• Figure 2.6. Banking Concentration and Competition and Capital Buffers of G-SIBs
  • Figure 2.6. Banking Concentration and Competition and Capital Buffers of G-SIBs (Markdown version)
  • Figure 2.6. Banking Concentration and Competition and Capital Buffers of G-SIBs (XLSX)
• Figure 2.8. Perceptions of Likelihood of Bailout of Systemic Institutions
  • Figure 2.8. Perceptions of Likelihood of Bailout of Systemic Institutions (Markdown version)
  • Figure 2.8. Perceptions of Likelihood of Bailout of Systemic Institutions (XLSX)
• annex-2-1
  • annex-2-1 (Markdown version)
  • annex-2-1 (PDF)
• Chapter 2
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• Summary
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• 110566.Figure 2.1
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• 110566.Figure 2.3
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References

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• Blog: The Financial System Is Stronger, but New Vulnerabilities Have Emerged in the Decade Since the Crisis
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• Podcast: Global Financial Stability Report: Trade Matters
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