{ "title": "Global Financial Stability Report, April 2022: Shockwaves from the War in Ukraine Test the Financial System’s Resilience", "publication": "Global Financial Stability Report, April 2022", "sourceUrl": "https://www.imf.org/en/publications/gfsr/issues/2022/04/19/global-financial-stability-report-april-2022", "canonical": "https://www.imf.org/en/publications/gfsr/issues/2022/04/19/global-financial-stability-report-april-2022", "overlayPath": "/en/publications/gfsr/issues/2022/04/19/global-financial-stability-report-april-2022/index.md", "summary": "Financial conditions have tightened and risks to the global economy have increased as a result of the war in Ukraine. Soaring commodity prices pose challenging trade-offs for central banks. Many emerging and frontier markets are facing especially difficult conditions.", "sections": [ { "heading": "Major findings and context", "content": "- \"Financial conditions have tightened and risks to the global economy have increased as a result of the war in Ukraine.\"\n- \"Soaring commodity prices pose challenging trade-offs for central banks.\"\n- \"Many emerging and frontier markets are facing especially difficult conditions.\"\n- \"In China, financial vulnerabilities remain elevated amid ongoing stress in the property sector and new COVID-19 outbreaks.\"\n- \"Bank holdings of domestic sovereign bonds have surged in emerging markets during the pandemic.\"\n- \"Fintech firms have rapidly grown into risky business segments, with inadequate regulation and interconnectedness with the traditional financial system.\"" }, { "heading": "Chapter 1 — The Financial Stability Implications of the War in Ukraine", "content": "- Reiterated finding: \"Financial conditions have tightened and risks to the global economy have increased as a result of the war in Ukraine.\"\n- Key stresses and trade-offs:\n - \"Soaring commodity prices pose challenging trade-offs for central banks.\"\n - \"Central banks should act decisively to prevent inflation from becoming entrenched without jeopardizing the recovery.\"\n - \"Policymakers will need to confront the structural issues brought to the fore by the war, including the trade-off between energy security and climate transition.\"\n- Specific country pressures:\n - \"Many emerging and frontier markets are facing especially difficult conditions.\"\n - \"In China, financial vulnerabilities remain elevated amid ongoing stress in the property sector and new COVID-19 outbreaks.\"" }, { "heading": "Chapter 2 — The Sovereign-Bank Nexus in Emerging Markets: A Risky Embrace", "content": "- Observations:\n - \"The COVID-19 pandemic has brought the relationship between sovereigns and banks—the so-called sovereign-bank nexus—in emerging market economies to the fore as bank holdings of domestic sovereign debt have surged.\"\n - \"With public debt at historically high levels and the sovereign credit outlook deteriorating, there is a risk of a negative feedback loop that could threaten macro-financial stability.\"\n- Empirical conclusions:\n - \"An increase in sovereign credit risk can adversely affect banks’ balance sheets and credit supply, especially in countries with less-well-capitalized banking systems.\"\n - \"Sovereign distress can also constrain funding for the nonfinancial corporate sector and reduce its capital expenditure.\"\n- Policy implication:\n - \"As global financial conditions tighten and geopolitical tensions intensify, a deeper nexus makes policy trade-offs in emerging markets more complex. Potential policy responses are discussed.\"" }, { "heading": "Chapter 3 — The Rapid Growth of Fintech: Vulnerabilities and Challenges for Financial Stability", "content": "- Summary of risks:\n - \"Fintech can increase efficiency and competition and broaden access to financial services.\"\n - \"However, the fast growth of fintech firms into risky business segments—and their inadequate regulation and interconnectedness with the traditional financial system—can have financial stability implications.\"\n- Focus areas examined:\n - \"Digital banks ('neobanks'), long-established fintech firms in the US mortgage market, and decentralized finance ('DeFi').\"\n- Policy recommendations:\n - \"The chapter argues that policies targeting fintech and traditional financial firms proportionately are needed.\"\n - \"In the case of DeFi, regulations should focus on the elements of the crypto ecosystem that enable it, such as stablecoin issuers and centralized exchanges.\"" }, { "heading": "Policy recommendations and priorities", "content": "- Central banks:\n - \"Act decisively to prevent inflation from becoming entrenched without jeopardizing the recovery.\"\n- Policymakers:\n - \"Intensify their efforts to implement the 2021 United Nations Climate Change Conference (COP26) road map while taking appropriate steps to address energy security concerns.\"\n- Regulatory approach to fintech:\n - \"Policies targeting fintech and traditional financial firms proportionately are needed.\"\n - For DeFi: \"Regulations should focus on the elements of the crypto ecosystem that enable it, such as stablecoin issuers and centralized exchanges.\"\n\nGlobal Financial Stability Report 4/19/2022 — Shockwaves from the War in Ukraine Test the Financial System’s Resilience\n\n---\n\n Content in this bundle\n\n- Chapter 1 Data\n - Chapter 1 Data (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n - Chapter 1 Data (XLSX){rel=\"external\" type=\"application/vnd.openxmlformats-officedocument.spreadsheetml.sheet\"}\n- Chapter 2 Data\n - Chapter 2 Data (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n - Chapter 2 Data (XLSX){rel=\"external\" type=\"application/vnd.openxmlformats-officedocument.spreadsheetml.sheet\"}\n- Chapter 3 Data\n - Chapter 3 Data (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n - Chapter 3 Data (XLSX){rel=\"external\" type=\"application/vnd.openxmlformats-officedocument.spreadsheetml.sheet\"}\n- CHAPTER 1 ThE FINANCIAL STABILITY IMPLICATIONS OF ThE wAR IN UkRAINE\n - CHAPTER 1 ThE FINANCIAL STABILITY IMPLICATIONS OF ThE wAR IN UkRAINE (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n - CHAPTER 1 ThE FINANCIAL STABILITY IMPLICATIONS OF ThE wAR IN UkRAINE (PDF){rel=\"external\" type=\"application/pdf\"}\n- Microsoft Word - GFSRApril2022Ch1OnlineBox.docx\n - Microsoft Word - GFSRApril2022Ch1OnlineBox.docx (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n - Microsoft Word - GFSRApril2022Ch1OnlineBox.docx (PDF){rel=\"external\" type=\"application/pdf\"}\n- Chapter 2\n - Chapter 2 (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n - Chapter 2 (PDF){rel=\"external\" type=\"application/pdf\"}\n- Chapter 2 Online Annex\n - Chapter 2 Online Annex (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n - Chapter 2 Online Annex (PDF){rel=\"external\" type=\"application/pdf\"}\n- CHAPTER 3 — THE RAPID GROWTH OF FINTECH: VULNERABILITIES AND CHALLENGES FOR FINANCIAL STABILITY\n - CHAPTER 3 — THE RAPID GROWTH OF FINTECH: VULNERABILITIES AND CHALLENGES FOR FINANCIAL STABILITY (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n - CHAPTER 3 — THE RAPID GROWTH OF FINTECH: VULNERABILITIES AND CHALLENGES FOR FINANCIAL STABILITY (PDF){rel=\"external\" type=\"application/pdf\"}\n- Chapter 3 Online Annex\n - Chapter 3 Online Annex (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n - Chapter 3 Online Annex (PDF){rel=\"external\" type=\"application/pdf\"}\n- Executive Summary\n - Executive Summary (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n - Executive Summary (PDF){rel=\"external\" type=\"application/pdf\"}\n- Foreword\n - Foreword (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n - Foreword (PDF){rel=\"external\" type=\"application/pdf\"}\n- Global Financial Stability Report, April 2022 - Implications of teh War in Ukraine; April 19, 2022\n - Global Financial Stability Report, April 2022 - Implications of teh War in Ukraine; April 19, 2022 (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n - Global Financial Stability Report, April 2022 - Implications of teh War in Ukraine; April 19, 2022 (PDF){rel=\"external\" type=\"application/pdf\"}\n- Full Report\n - Full Report (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n - Full Report (PDF){rel=\"external\" type=\"application/pdf\"}\n\n---\n\n References\n\n- Blog by IMF Staff\n- https://blogs.imf.org/2022/04/18/emerging-market-banks-government-debt-holdings-pose-financial-stability-risks/\n- watch the video\n- blog by imf staff\n- https://www.imf.org/en/home\n\nSource: https://www.imf.org/en/publications/gfsr/issues/2022/04/19/global-financial-stability-report-april-2022" } ], "bullets": [ "[Markdown version](/en/publications/gfsr/issues/2022/04/19/global-financial-stability-report-april-2022/index.md)", "[Structured JSON version](/en/publications/gfsr/issues/2022/04/19/global-financial-stability-report-april-2022/index.json)", "[Bundle manifest](/en/publications/gfsr/issues/2022/04/19/global-financial-stability-report-april-2022/bundle-manifest.json)", "Published: April 19, 2022", "\"Financial conditions have tightened and risks to the global economy have increased as a result of the war in Ukraine.\"", "\"Soaring commodity prices pose challenging trade-offs for central banks.\"", "\"Many emerging and frontier markets are facing especially difficult conditions.\"", "\"In China, financial vulnerabilities remain elevated amid ongoing stress in the property sector and new COVID-19 outbreaks.\"", "\"Bank holdings of domestic sovereign bonds have surged in emerging markets during the pandemic.\"", "\"Fintech firms have rapidly grown into risky business segments, with inadequate regulation and interconnectedness with the traditional financial system.\"", "Reiterated finding: \"Financial conditions have tightened and risks to the global economy have increased as a result of the war in Ukraine.\"", "Key stresses and trade-offs:", "Specific country pressures:", "Observations:", "Empirical conclusions:", "Policy implication:", "Summary of risks:", "Focus areas examined:", "Policy recommendations:", "Central banks:", "Policymakers:", "Regulatory approach to fintech:", "**Chapter 1 Data**", "**Chapter 2 Data**", "**Chapter 3 Data**", "**CHAPTER 1 ThE FINANCIAL STABILITY IMPLICATIONS OF ThE wAR IN UkRAINE**", "**Microsoft Word - GFSR_April2022_Ch1_OnlineBox.docx**", "**Chapter 2**", "**Chapter 2 Online Annex**", "**CHAPTER 3 — THE RAPID GROWTH OF FINTECH: VULNERABILITIES AND CHALLENGES FOR FINANCIAL STABILITY**", "**Chapter 3 Online Annex**", "**Executive Summary**", "**Foreword**", "**Global Financial Stability Report, April 2022 - Implications of teh War in Ukraine; April 19, 2022**", "**Full Report**", "[Blog by IMF Staff](https://blogs.imf.org/2022/04/19/financial-stability-risks-grow-as-war-complicates-push-to-contain-inflation/)", "[https://blogs.imf.org/2022/04/18/emerging-market-banks-government-debt-holdings-pose-financial-stability-risks/](https://blogs.imf.org/2022/04/18/emerging-market-banks-government-debt-holdings-pose-financial-stability-risks/)", "[watch the video](https://www.imf.org/en/Videos/view?vid=6303829953001)", "[blog by imf staff](https://blogs.imf.org/2022/04/13/fast-moving-fintech-poses-challenge-for-regulators/)" ], "related": [ { "title": "Chapter 1 Data", "role": "dataset", "sourceUrl": "https://www.imf.org/-/media/files/publications/gfsr/2022/april/data/ch1data.xlsx", "summary": { "path": "/-/media/files/publications/gfsr/2022/april/data/ch1data.xlsx.md", "mime": "text/markdown" }, "binary": { "path": "/-/media/files/publications/gfsr/2022/april/data/ch1data.xlsx", "mime": "application/vnd.openxmlformats-officedocument.spreadsheetml.sheet" } }, { "title": "Chapter 2 Data", "role": "dataset", "sourceUrl": "https://www.imf.org/-/media/files/publications/gfsr/2022/april/data/ch2data.xlsx", "summary": { "path": "/-/media/files/publications/gfsr/2022/april/data/ch2data.xlsx.md", "mime": "text/markdown" }, "binary": { "path": "/-/media/files/publications/gfsr/2022/april/data/ch2data.xlsx", "mime": "application/vnd.openxmlformats-officedocument.spreadsheetml.sheet" } }, { "title": "Chapter 3 Data", "role": "dataset", "sourceUrl": "https://www.imf.org/-/media/files/publications/gfsr/2022/april/data/ch3data.xlsx", "summary": { "path": "/-/media/files/publications/gfsr/2022/april/data/ch3data.xlsx.md", "mime": "text/markdown" }, "binary": { "path": "/-/media/files/publications/gfsr/2022/april/data/ch3data.xlsx", "mime": "application/vnd.openxmlformats-officedocument.spreadsheetml.sheet" } }, { "title": "CHAPTER 1 ThE FINANCIAL STABILITY IMPLICATIONS OF ThE wAR IN UkRAINE", "role": "chapter", "sourceUrl": "https://www.imf.org/-/media/files/publications/gfsr/2022/april/english/ch1.pdf", "summary": { "path": "/-/media/files/publications/gfsr/2022/april/english/ch1.pdf.md", "mime": "text/markdown" }, "binary": { "path": "/-/media/files/publications/gfsr/2022/april/english/ch1.pdf", "mime": "application/pdf" } }, { "title": "Microsoft Word - 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