Global Financial Stability Report, April 2022: Shockwaves from the War in Ukraine Test the Financial System’s Resilience
April 19, 2022
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Format: Chicago
Summary
Shockwaves from the War in Ukraine Test the Financial System’s Resilience
Chapter 1 looks at the implications of the war in Ukraine on the financial system. 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. 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. Chapter 2 discusses the sovereign-bank nexus in emerging markets. Bank holdings of domestic sovereign bonds have surged in emerging markets during the pandemic. 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. Chapter 3 examines the challenges to financial stability posed by the rapid rise of risky business segments in fintech. Policies that target both fintech firms and incumbent banks proportionately are needed.
Subject: Asset and liability management, Blockchain and DLT, Central banks, Emerging and frontier financial markets, Financial markets, Fintech, Public debt, Technology, Virtual currencies
Keywords: Blockchain and DLT, Caribbean, Central and Eastern Europe, Debt, Eastern Europe, Emerging and frontier financial markets, Europe, Financial stability, Fintech, Fintech, Global, Hard currency yield, Inflation, Inflation pressure, Monetary policy stance, Policy priority, Risks of fragmentation, Sovereign-bank nexus, Trade market, Virtual currencies, War in Ukraine
Publication Details
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Pages:
103
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Volume:
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DOI:
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Issue:
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Series:
Global Financial Stability Report No 2022/001
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Stock No:
GFSREA2022001
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ISBN:
9798400205293
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ISSN:
1729-701X
