## Global Financial Stability Report, April 2020: Markets in the Time of COVID-19 _Global Financial Stability Report, April 14, 2020_ ## Source details **Canonical URL:** [Global Financial Stability Report, April 2020: Markets in the Time of COVID-19](https://www.imf.org/en/publications/gfsr/issues/2020/04/14/global-financial-stability-report-april-2020-49020) ## Other formats - [Markdown version](/en/publications/gfsr/issues/2020/04/14/global-financial-stability-report-april-2020-49020/index.md) - [Structured JSON version](/en/publications/gfsr/issues/2020/04/14/global-financial-stability-report-april-2020-49020/index.json) - [Bundle manifest](/en/publications/gfsr/issues/2020/04/14/global-financial-stability-report-april-2020-49020/bundle-manifest.json) ## Bibliographic details - Published: April 14, 2020 - Series: Global Financial Stability Report - DOI: https://doi.org/10.5089/9781513529196.082 --- ### Overview - Publication date: April 14, 2020 - Principal focus: financial stability challenges posed by the coronavirus (COVID-19) pandemic. - High-level finding: financial conditions tightened abruptly with the onset of the pandemic, with risk asset prices dropping sharply as investors rushed to safety and liquidity. ### Chapter 1 — Financial conditions and vulnerabilities - Findings: - Financial conditions tightened abruptly with the onset of the pandemic. - Risk asset prices dropped sharply as investors rushed to safety and liquidity. - A further tightening of financial conditions may expose vulnerabilities, including among nonbank financial institutions. - Bank resilience may be tested if economic and financial market stresses rise. ### Chapter 2 — Vulnerabilities in risky corporate credit markets - Findings: - Vulnerabilities in global risky corporate credit markets include: - Weakened credit quality of borrowers. - Looser underwriting standards. - Liquidity risks at investment funds. - Increased interconnectedness. - These vulnerabilities could generate losses at nonbank financial institutions in a severe adverse scenario. ### Chapter 3 — Portfolio flows to emerging and frontier markets - Findings: - The pandemic led to an unprecedented and sharp reversal of portfolio flows, highlighting the challenges of managing flows in emerging and frontier markets. - Global financial conditions tend to influence portfolio flows more during surges than in normal times. - Stronger domestic fundamentals can help mitigate outflows. - Greater foreign participation in local currency bond markets may increase price volatility where domestic markets lack depth. ### Chapter 4 — Bank profitability pressures - Findings: - Beyond immediate COVID-19 challenges, banks are likely to face profitability pressures over the medium term in an environment where low interest rates are expected to persist. ### Chapter 5 — Physical risks associated with climate change - Findings: - Physical risks associated with climate change do not appear to be reflected in global equity valuations. - Stress testing and better disclosure of exposures to climatic hazards are essential to better assess physical risk. --- ## References - 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