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

Assumptions and Conventions vii
Further Information viii
Preface ix
Foreword x
Executive Summary xii
IMF Executive Board Discussion of the Outlook, September 2025 xvii

Chapter 1. Shifting Ground beneath the Calm: Stability Challenges amid Changes in Financial Markets 1
 Chapter 1 at a Glance 1
 Introduction 1
 Financial Market Developments and Asset Valuations 2
 Financial Conditions Ease, but the Growth-at-Risk Metric Remains Elevated 9
 Emerging and Frontier Markets 10
 Sovereign Bond Markets 14
 Financial Intermediaries 21
 Corporate Credit Risk 29
 Policy Recommendations 34
 Box 1.1. Global Real Estate Update 38
 Box 1.2. Low Interest Rates in China Could Imperil Bank Profits and Lending 41
 Box 1.3. Banks and Insurers Are Deepening Ties with the Private Credit Ecosystem 43
 References 45

Chapter 2. Risk and Resilience in the Global Foreign Exchange Market 47
 Chapter 2 at a Glance 47
 Introduction 47
 Macrofinancial Shocks and the Global Foreign Exchange Market: A Conceptual Framework 51
 The Evolving Landscape of the Global Foreign Exchange Market 53
 Macrofinancial Uncertainty and FX Trading Dynamics 56
 Uncertainty Shocks and Stress in Foreign Exchange Markets 59
 Spillovers of Foreign Exchange Market Stress to Other Asset Classes 64
 Conclusion and Policy Recommendations 65
 Box 2.1. Foreign Exchange Market Dynamics around the April US Tariff Announcement 68
 Box 2.2. The Relevance of Settlement Risk in Foreign Exchange Markets 70
 Box 2.3. Implications of Operational Disruptions in Foreign Exchange Markets 72
 References 74

Chapter 3. Global Shocks, Local Markets: The Changing Landscape of Emerging Market Sovereign Debt 77
 Chapter 3 at a Glance 77
 Introduction 77
 Framework for Assessing EMDE Sovereign Debt Markets 79
 Recent Trends in EMDE Sovereign Debt Markets 80
 EMDE Bond Market Sensitivity to Global Shocks 85
 Vulnerabilities: Limited Absorption Capacity and the Sovereign-Bank Nexus 87
 Deepening Local Currency Bond Markets to Enhance Financial Stability 92
 Policy Recommendations 97
 Box 3.1. Local Currency Debt and Domestic Investors in the Corporate Sector in Emerging Market and Developing Economies 100
 Box 3.2. Case Studies of Local Currency Bond Market Reforms in Emerging Market and Developing Economies Supported by IMF Technical Assistance 102
 References 103