What is the Global Financial Stability Report?

The Global Financial Stability Report (GFSR) is a semiannual report by the International Monetary Fund (IMF) that assesses the stability of global financial markets and emerging-market financing. It is released twice per year, in April and October. The GFSR focuses on current conditions, especially financial and structural imbalances, that could risk an upset in global financial stability and access to financing by emerging-market countries. It emphasizes the ramifications of financial and economic imbalances that are highlighted in one of the IMF's other publications, the World Economic Outlook. Topics covered in the GFSR usually include systemic risk assessments in worldwide financial markets, worldwide debt management, emerging economic markets and current economic crises that could affect finances worldwide.

Understanding the Global Financial Stability Report (GFSR)

The Global Financial Stability Report (GFSR) replaced two previous reports by the IMF, the annual International Capital Markets Report and the quarterly Emerging Market Financing Report. The purpose of replacing them was to provide a more frequent assessment of the worldwide financial markets and to focus on emerging market financing in a global context. In addition to assessing the condition of worldwide markets, the GSFR also issues recommendations for central banks, policymakers and others who supervise global financial markets.

April 2019 GFSR

The April 2019 GFSR consisted of front matter and two chapters. The first chapter discussed the growth of short-term and medium-term risks to global financial stability since the October 2018 GFSR. The vulnerabilities listed in the GSFR ranged from the financial sector nexus in the euro area to problems in the Chinese economy to the risks prevalent in the housing market.

The interconnected nature of the global economy means that these vulnerabilities could present significant risks in the future. For example, China's economy remains a tightrope between supporting near-term growth and preventing excessive leverage within the economy through regulatory tightening. Given China's manufacturing prowess and the inclusion of its currency in IMF's global benchmark indices, these problems could reverberate throughout the world economy.

The second chapter of the GSFR report dealt with the risks prevalent in the housing market. According to the GSFR, the downside risks in the current housing market include growth of excessive credit and tighter financial conditions in the years ahead.