## Global Financial Stability Report, April 2022: Shockwaves from the War in Ukraine Test the Financial System’s Resilience _Global Financial Stability Report, April 2022_ ## Source details **Canonical URL:** [Global Financial Stability Report, April 2022: Shockwaves from the War in Ukraine Test the Financial System’s Resilience](https://www.imf.org/en/publications/gfsr/issues/2022/04/19/global-financial-stability-report-april-2022) ## Other formats - [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) ## Bibliographic details - Published: April 19, 2022 --- ### Major findings and context - "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." ### Chapter 1 — The Financial Stability Implications of the War in Ukraine - 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: - "Soaring commodity prices pose challenging trade-offs for central banks." - "Central banks should act decisively to prevent inflation from becoming entrenched without jeopardizing the recovery." - "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." - Specific country pressures: - "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." ### Chapter 2 — The Sovereign-Bank Nexus in Emerging Markets: A Risky Embrace - Observations: - "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." - "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." - Empirical conclusions: - "An increase in sovereign credit risk can adversely affect banks’ balance sheets and credit supply, especially in countries with less-well-capitalized banking systems." - "Sovereign distress can also constrain funding for the nonfinancial corporate sector and reduce its capital expenditure." - Policy implication: - "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." ### Chapter 3 — The Rapid Growth of Fintech: Vulnerabilities and Challenges for Financial Stability - Summary of risks: - "Fintech can increase efficiency and competition and broaden access to financial services." - "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." - Focus areas examined: - "Digital banks ('neobanks'), long-established fintech firms in the US mortgage market, and decentralized finance ('DeFi')." - Policy recommendations: - "The chapter argues that policies targeting fintech and traditional financial firms proportionately are needed." - "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." ### Policy recommendations and priorities - Central banks: - "Act decisively to prevent inflation from becoming entrenched without jeopardizing the recovery." - Policymakers: - "Intensify their efforts to implement the 2021 United Nations Climate Change Conference (COP26) road map while taking appropriate steps to address energy security concerns." - Regulatory approach to fintech: - "Policies targeting fintech and traditional financial firms proportionately are needed." - For DeFi: "Regulations should focus on the elements of the crypto ecosystem that enable it, such as stablecoin issuers and centralized exchanges." *Global Financial Stability Report 4/19/2022 — Shockwaves from the War in Ukraine Test the Financial System’s Resilience* --- ## Content in this bundle - **Chapter 1 Data** - [Chapter 1 Data (Markdown version)](/-/media/files/publications/gfsr/2022/april/data/ch1data.xlsx.md){rel="alternate" type="text/markdown"} - [Chapter 1 Data (XLSX)](/-/media/files/publications/gfsr/2022/april/data/ch1data.xlsx){rel="external" type="application/vnd.openxmlformats-officedocument.spreadsheetml.sheet"} - **Chapter 2 Data** - [Chapter 2 Data (Markdown version)](/-/media/files/publications/gfsr/2022/april/data/ch2data.xlsx.md){rel="alternate" type="text/markdown"} - [Chapter 2 Data (XLSX)](/-/media/files/publications/gfsr/2022/april/data/ch2data.xlsx){rel="external" type="application/vnd.openxmlformats-officedocument.spreadsheetml.sheet"} - **Chapter 3 Data** - [Chapter 3 Data (Markdown version)](/-/media/files/publications/gfsr/2022/april/data/ch3data.xlsx.md){rel="alternate" type="text/markdown"} - [Chapter 3 Data (XLSX)](/-/media/files/publications/gfsr/2022/april/data/ch3data.xlsx){rel="external" type="application/vnd.openxmlformats-officedocument.spreadsheetml.sheet"} - **CHAPTER 1 ThE FINANCIAL STABILITY IMPLICATIONS OF ThE wAR IN UkRAINE** - [CHAPTER 1 ThE FINANCIAL STABILITY IMPLICATIONS OF ThE wAR IN UkRAINE (Markdown version)](/-/media/files/publications/gfsr/2022/april/english/ch1.pdf.md){rel="alternate" type="text/markdown"} - [CHAPTER 1 ThE FINANCIAL STABILITY IMPLICATIONS OF ThE wAR IN UkRAINE (PDF)](/-/media/files/publications/gfsr/2022/april/english/ch1.pdf){rel="external" type="application/pdf"} - **Microsoft Word - GFSR_April2022_Ch1_OnlineBox.docx** - [Microsoft Word - GFSR_April2022_Ch1_OnlineBox.docx (Markdown version)](/-/media/files/publications/gfsr/2022/april/english/ch1onlinebox.pdf.md){rel="alternate" type="text/markdown"} - [Microsoft Word - GFSR_April2022_Ch1_OnlineBox.docx (PDF)](/-/media/files/publications/gfsr/2022/april/english/ch1onlinebox.pdf){rel="external" type="application/pdf"} - **Chapter 2** - [Chapter 2 (Markdown version)](/-/media/files/publications/gfsr/2022/april/english/ch2.pdf.md){rel="alternate" type="text/markdown"} - [Chapter 2 (PDF)](/-/media/files/publications/gfsr/2022/april/english/ch2.pdf){rel="external" type="application/pdf"} - **Chapter 2 Online Annex** - [Chapter 2 Online Annex (Markdown version)](/-/media/files/publications/gfsr/2022/april/english/ch2onlineannex.pdf.md){rel="alternate" type="text/markdown"} - [Chapter 2 Online Annex (PDF)](/-/media/files/publications/gfsr/2022/april/english/ch2onlineannex.pdf){rel="external" type="application/pdf"} - **CHAPTER 3 — THE RAPID GROWTH OF FINTECH: VULNERABILITIES AND CHALLENGES FOR FINANCIAL STABILITY** - [CHAPTER 3 — THE RAPID GROWTH OF FINTECH: VULNERABILITIES AND CHALLENGES FOR FINANCIAL STABILITY (Markdown version)](/-/media/files/publications/gfsr/2022/april/english/ch3.pdf.md){rel="alternate" type="text/markdown"} - [CHAPTER 3 — THE RAPID GROWTH OF FINTECH: VULNERABILITIES AND CHALLENGES FOR FINANCIAL STABILITY (PDF)](/-/media/files/publications/gfsr/2022/april/english/ch3.pdf){rel="external" type="application/pdf"} - **Chapter 3 Online Annex** - [Chapter 3 Online Annex (Markdown version)](/-/media/files/publications/gfsr/2022/april/english/ch3onlineannex.pdf.md){rel="alternate" type="text/markdown"} - [Chapter 3 Online Annex (PDF)](/-/media/files/publications/gfsr/2022/april/english/ch3onlineannex.pdf){rel="external" type="application/pdf"} - **Executive Summary** - [Executive Summary (Markdown version)](/-/media/files/publications/gfsr/2022/april/english/execsum.pdf.md){rel="alternate" type="text/markdown"} - [Executive Summary (PDF)](/-/media/files/publications/gfsr/2022/april/english/execsum.pdf){rel="external" type="application/pdf"} - **Foreword** - [Foreword (Markdown version)](/-/media/files/publications/gfsr/2022/april/english/foreword.pdf.md){rel="alternate" type="text/markdown"} - [Foreword (PDF)](/-/media/files/publications/gfsr/2022/april/english/foreword.pdf){rel="external" type="application/pdf"} - **Global Financial Stability Report, April 2022 - Implications of teh War in Ukraine; April 19, 2022** - [Global Financial Stability Report, April 2022 - Implications of teh War in Ukraine; April 19, 2022 (Markdown version)](/-/media/files/publications/gfsr/2022/april/english/infographic.pdf.md){rel="alternate" type="text/markdown"} - [Global Financial Stability Report, April 2022 - Implications of teh War in Ukraine; April 19, 2022 (PDF)](/-/media/files/publications/gfsr/2022/april/english/infographic.pdf){rel="external" type="application/pdf"} - **Full Report** - [Full Report (Markdown version)](/-/media/files/publications/gfsr/2022/april/english/text.pdf.md){rel="alternate" type="text/markdown"} - [Full Report (PDF)](/-/media/files/publications/gfsr/2022/april/english/text.pdf){rel="external" type="application/pdf"} --- ## References - [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/) _Source: https://www.imf.org/en/publications/gfsr/issues/2022/04/19/global-financial-stability-report-april-2022_