## Global Financial Stability Report, October 2025: Shifting Ground beneath the Calm

_Global Financial Stability Report, October 2025_

## Source details

**Canonical URL:** [Global Financial Stability Report, October 2025: Shifting Ground beneath the Calm](https://www.imf.org/en/publications/gfsr/issues/2025/10/14/global-financial-stability-report-october-2025)

## Other formats

- [Markdown version](/en/publications/gfsr/issues/2025/10/14/global-financial-stability-report-october-2025/index.md)
- [Structured JSON version](/en/publications/gfsr/issues/2025/10/14/global-financial-stability-report-october-2025/index.json)
- [Bundle manifest](/en/publications/gfsr/issues/2025/10/14/global-financial-stability-report-october-2025/bundle-manifest.json)

## Bibliographic details
- Published: October 14, 2025

---

### Elevated Financial Stability Risks — Overview
- Financial stability risks remain elevated amid stretched asset valuations, growing pressure in sovereign bond markets, and the increasing role of nonbank financial institutions (NBFIs).
- Markets appear complacent despite shifting ground: valuations have returned to stretched levels since the April 2025 Global Financial Stability Report, and financial conditions have eased.
- Valuation models show risk asset prices well above fundamentals, raising the risk of sharp corrections.
- Sovereign bond markets face pressure from widening fiscal deficits.
- Stress tests reveal greater interconnectedness and maturity mismatches among banks and NBFIs that could amplify shocks.
- Interacting vulnerabilities: an abrupt decline in asset prices or sharp rise in yields could strain banks’ balance sheets and pressure open-ended funds; greater interconnectedness between banks and NBFIs would intensify transmission of shocks across the financial system.

### Global Foreign Exchange Market — Risks and Mechanisms (Chapter 2)
- The FX market is the world’s largest and most liquid financial market, driven largely by rising participation of nonbank financial institutions and increased use of derivatives.
- Episodes of heightened macrofinancial uncertainty affect FX market functioning by:
  - Raising foreign currency funding costs.
  - Widening bid-ask spreads.
  - Amplifying excess exchange rate return volatility.
- Structural vulnerabilities amplifying FX strains:
  - Significant currency mismatches on balance sheets.
  - Concentrated dealer activity.
  - Elevated participation by nonbank financial institutions.
- Additional operational and settlement risks:
  - Heightened settlement risks (the possibility that one party will deliver currency without receiving the countervalue).
  - Exposure to operational risks including technical failures and cyberattacks.
- Spillovers: Stress in FX markets can spill over into other asset classes, tightening overall financial conditions, especially in economies with significant currency mismatches or weaker fiscal positions.
- Policy mitigation levers:
  - Enhancing surveillance.
  - Ensuring adequate buffers at financial institutions.
  - Strengthening the global financial safety net and operational resilience.

### Emerging Market Sovereign Debt — Changing Landscape (Chapter 3)
- Context: rising debt levels, heightened vulnerabilities to global shocks, and reduced interest from global investors given lagging performance of emerging market debt.
- Divergent paths:
  - Major emerging markets: largely able to expand borrowing through increased local issuance to local investors.
  - Other emerging and frontier markets: reliance on shorter maturity financing from domestic banks and the central bank, as well as foreign currency debt.
- New empirical finding: countries with deeper local investor bases have experienced greater resilience to global shocks over the last 15 years.
- Risks from local investor reliance:
  - Heavy borrowing.
  - Overreliance on a narrow group of domestic investors, particularly if driven by financial repression.
- Policy priorities to develop strong and resilient local currency bond markets:
  - Improve macroeconomic fundamentals.
  - Strengthen policy frameworks and robust financial market systems.
  - Develop foundational market infrastructure.
  - Provide legal certainty.
  - Strengthen sovereign debt management practices.

### Policy Priorities and Recommendations (Across Chapters)
- Preserve central bank operational independence in addressing inflation.
- Curb government deficits.
- Advance internationally agreed prudential standards such as Basel 3.
- Strengthen financial safety nets.
- Enhance oversight of nonbank financial institutions.
- Regulate stablecoins effectively.
- For FX markets: enhance surveillance, ensure adequate buffers, and strengthen operational resilience.
- For emerging market debt: develop market infrastructure, legal frameworks, and sovereign debt management.

*International Monetary Fund — Global Financial Stability Report, October 2025*

---

## Content in this bundle

- **Chapter 1 Data**
  - [Chapter 1 Data (Markdown version)](/-/media/files/publications/gfsr/2025/october/data/ch1data.xlsx.md){rel="alternate" type="text/markdown"}
  - [Chapter 1 Data (XLSX)](/-/media/files/publications/gfsr/2025/october/data/ch1data.xlsx){rel="external" type="application/vnd.openxmlformats-officedocument.spreadsheetml.sheet"}
- **Chapter 2 Data**
  - [Chapter 2 Data (Markdown version)](/-/media/files/publications/gfsr/2025/october/data/ch2data.xlsx.md){rel="alternate" type="text/markdown"}
  - [Chapter 2 Data (XLSX)](/-/media/files/publications/gfsr/2025/october/data/ch2data.xlsx){rel="external" type="application/vnd.openxmlformats-officedocument.spreadsheetml.sheet"}
- **Chapter 1**
  - [Chapter 1 (Markdown version)](/-/media/files/publications/gfsr/2025/october/english/ch1.pdf.md){rel="alternate" type="text/markdown"}
  - [Chapter 1 (PDF)](/-/media/files/publications/gfsr/2025/october/english/ch1.pdf){rel="external" type="application/pdf"}
- **Chapter 1 Annex**
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  - [Chapter 1 Annex (PDF)](/-/media/files/publications/gfsr/2025/october/english/ch1annex.pdf){rel="external" type="application/pdf"}
- **Chapter 2**
  - [Chapter 2 (Markdown version)](/-/media/files/publications/gfsr/2025/october/english/ch2.pdf.md){rel="alternate" type="text/markdown"}
  - [Chapter 2 (PDF)](/-/media/files/publications/gfsr/2025/october/english/ch2.pdf){rel="external" type="application/pdf"}
- **Chapter 2 Annex**
  - [Chapter 2 Annex (Markdown version)](/-/media/files/publications/gfsr/2025/october/english/ch2annex.pdf.md){rel="alternate" type="text/markdown"}
  - [Chapter 2 Annex (PDF)](/-/media/files/publications/gfsr/2025/october/english/ch2annex.pdf){rel="external" type="application/pdf"}
- **Risk and Resilience in the Global Foreign Exchange Market — Chapter 2 Summary**
  - [Risk and Resilience in the Global Foreign Exchange Market — Chapter 2 Summary (Markdown version)](/-/media/files/publications/gfsr/2025/october/english/ch2sum.pdf.md){rel="alternate" type="text/markdown"}
  - [Risk and Resilience in the Global Foreign Exchange Market — Chapter 2 Summary (PDF)](/-/media/files/publications/gfsr/2025/october/english/ch2sum.pdf){rel="external" type="application/pdf"}
- **Chapter 3**
  - [Chapter 3 (Markdown version)](/-/media/files/publications/gfsr/2025/october/english/ch3.pdf.md){rel="alternate" type="text/markdown"}
  - [Chapter 3 (PDF)](/-/media/files/publications/gfsr/2025/october/english/ch3.pdf){rel="external" type="application/pdf"}
- **Chapter 3 Annex**
  - [Chapter 3 Annex (Markdown version)](/-/media/files/publications/gfsr/2025/october/english/ch3annex.pdf.md){rel="alternate" type="text/markdown"}
  - [Chapter 3 Annex (PDF)](/-/media/files/publications/gfsr/2025/october/english/ch3annex.pdf){rel="external" type="application/pdf"}
- **Ch3sum**
  - [Ch3sum (Markdown version)](/-/media/files/publications/gfsr/2025/october/english/ch3sum.pdf.md){rel="alternate" type="text/markdown"}
  - [Ch3sum (PDF)](/-/media/files/publications/gfsr/2025/october/english/ch3sum.pdf){rel="external" type="application/pdf"}
- **Executive Summary**
  - [Executive Summary (Markdown version)](/-/media/files/publications/gfsr/2025/october/english/execsum.pdf.md){rel="alternate" type="text/markdown"}
  - [Executive Summary (PDF)](/-/media/files/publications/gfsr/2025/october/english/execsum.pdf){rel="external" type="application/pdf"}
- **Foreword**
  - [Foreword (Markdown version)](/-/media/files/publications/gfsr/2025/october/english/foreword.pdf.md){rel="alternate" type="text/markdown"}
  - [Foreword (PDF)](/-/media/files/publications/gfsr/2025/october/english/foreword.pdf){rel="external" type="application/pdf"}
- **Global Financial Stability Report, October 2025, "Shifting Ground beneath the Calm"**
  - [Global Financial Stability Report, October 2025, "Shifting Ground beneath the Calm" (Markdown version)](/-/media/files/publications/gfsr/2025/october/english/infographic.pdf.md){rel="alternate" type="text/markdown"}
  - [Global Financial Stability Report, October 2025, "Shifting Ground beneath the Calm" (PDF)](/-/media/files/publications/gfsr/2025/october/english/infographic.pdf){rel="external" type="application/pdf"}
- **Full Report**
  - [Full Report (Markdown version)](/-/media/files/publications/gfsr/2025/october/english/text.pdf.md){rel="alternate" type="text/markdown"}
  - [Full Report (PDF)](/-/media/files/publications/gfsr/2025/october/english/text.pdf){rel="external" type="application/pdf"}

---

## References

- [Previous Issues](https://www.imf.org/en/Publications/GFSR)
- [Blog by IMF Financial Counsellor Tobias Adrian](https://www.imf.org/en/blogs/articles/2025/10/14/growth-of-nonbanks-is-revealing-new-financial-stability-risks)
- [Press Conference](https://www.imf.org/en/Videos/view?vid=6382741043112)
- [Replay the Event](https://www.imf.org/en/Videos/view?vid=6382152393112)
- [Read the Blog](https://www.imf.org/en/blogs/articles/2025/10/07/economic-uncertainty-can-test-the-resilience-of-the-foreign-exchange-market)
- [Replay the Event](https://www.imf.org/en/Videos/view?vid=6382100527112)
- [Read the Blog](https://www.imf.org/en/blogs/articles/2025/10/06/good-policies-and-good-luck-helped-emerging-economies-better-resist-shocks)

_Source: https://www.imf.org/en/publications/gfsr/issues/2025/10/14/global-financial-stability-report-october-2025_