Front Matter

Front Matter

International Monetary Fund. Monetary and Capital Markets Department
Published Date:
April 2016
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World Economic and Financial Surveys

Global Financial Stability Report

April 2016

Potent Policies for a Successful Normalization

©2016 International Monetary Fund

Cover and Design: Luisa Menjivar and Jorge Salazar Composition: AGS, An RR Donnelley Company

Cataloging-in-Publication Data

Joint Bank-Fund Library

Names: International Monetary Fund.

Title: Global financial stability report.

Other titles: GFSR | World economic and financial surveys, 0258-7440

Description: Washington, DC: International Monetary Fund, 2002- | Semiannual | Some issues also have thematic titles. | Began with issue for March 2002.

Subjects: LCSH: Capital market—Statistics—Periodicals. | International finance—Forecasting—Periodicals. | Economic stabilization—Periodicals.

Classification: LCC HG4523.G557

ISBN 978-1-51350-677-7 (Paper)

978-1-49836-328-0 (ePub)

978-1-48431-450-0 (Mobipocket)

978-1-48431-436-4 (PDF)

Disclaimer: The Global Financial Stability Report (GFSR) is a survey by the IMF staff published twice a year, in the spring and fall. The report draws out the financial ramifications of economic issues highlighted in the IMF’s World Economic Outlook (WEO). The report was prepared by IMF staff and has benefited from comments and suggestions from Executive Directors following their discussion of the report on March 28, 2016. The views expressed in this publication are those of the IMF staff and do not necessarily represent the views of the IMF’s Executive Directors or their national authorities.

Recommended citation: International Monetary Fund, Global Financial Stability Report—Potent Policies for a Successful Normalization (Washington, April 2016).

Please send orders to:

International Monetary Fund, Publications Services

P.O. Box 92780, Washington, DC 20090, U.S.A.

Tel.: (202) 623-7430 Fax: (202) 623-7201



Assumptions and Conventions

The following conventions are used throughout the Global Financial Stability Report (GFSR):

… to indicate that data are not available or not applicable;

— to indicate that the figure is zero or less than half the final digit shown, or that the item does not exist;

– between years or months (for example, 2014–15 or January–June) to indicate the years or months covered, including the beginning and ending years or months;

/ between years or months (for example, 2014/15) to indicate a fiscal or financial year.

“Billion” means a thousand million.

“Trillion” means a thousand billion.

“Basis points” refers to hundredths of 1 percentage point (for example, 25 basis points are equivalent to ¼ of 1 percentage point).

If no source is listed on tables and figures, data are based on IMF staff estimates or calculations.

Minor discrepancies between sums of constituent figures and totals shown reflect rounding.

As used in this report, the terms “country” and “economy” do not in all cases refer to a territorial entity that is a state as understood by international law and practice. As used here, the term also covers some territorial entities that are not states but for which statistical data are maintained on a separate and independent basis.

Further Information and Data

This version of the GFSR is available in full through the IMF eLibrary ( and the IMF website (

The data and analysis appearing in the GFSR are compiled by the IMF staff at the time of publication. Every effort is made to ensure, but not guarantee, their timeliness, accuracy, and completeness. When errors are discovered, there is a concerted effort to correct them as appropriate and feasible. Corrections and revisions made after publication are incorporated into the electronic editions available from the IMF eLibrary ( and on the IMF website ( All substantive changes are listed in detail in the online tables of contents.

For details on the terms and conditions for usage of the contents of this publication, please refer to the IMF Copyright and Usage website,


The Global Financial Stability Report (GFSR) assesses key risks facing the global financial system. In normal times, the report seeks to play a role in preventing crises by highlighting policies that may mitigate systemic risks, thereby contributing to global financial stability and the sustained economic growth of the IMF’s member countries.

The current report finds that global financial stability risks have risen since October 2015. The report finds that the outlook has deteriorated in advanced economies because of heightened uncertainty and setbacks to growth and confidence, while declines in oil and commodity prices and slower growth have kept risks elevated in emerging markets. These developments have tightened financial conditions, reduced risk appetite, raised credit risks, and stymied balance sheet repair. A broad-based policy response is needed to secure financial stability. Advanced economies must deal with crisis legacy issues, emerging markets need to bolster their resilience to global headwinds, and the resilience of market liquidity should be enhanced. The report also examines financial spillovers from emerging market economies and finds that they have risen substantially. This implies that when assessing macrofinancial conditions, policymakers may need to increasingly take into account economic developments in emerging market economies. Finally, the report assesses changes in the systemic importance of insurers, finding that across advanced economies the contribution of life insurers to systemic risk has increased in recent years. The results suggest that supervisors and regulators should take a more macroprudential approach to the sector.

The analysis in this report has been coordinated by the Monetary and Capital Markets (MCM) Department under the general direction of José Viñals, Financial Counsellor and Director. The project has been directed by Peter Dattels and Dong He, both Deputy Directors, as well as by Gaston Gelos and Matthew Jones, both Division Chiefs. It has benefited from comments and suggestions from the senior staff in the MCM Department.

Individual contributors to the report are Viral Acharya, Ali Al-Eyd, Adrian Alter, Luis Brandão-Marques, Carlos Caceres, John Caparusso, Jorge Chan-Lau, Qianying Chen, Sally Chen, Yingyuan Chen, Kay Chung, Fabio Cortes, Cristina Cuervo, Alfredo Cuevas, Martin Edmonds, Jesse Eiseman, Selim Elekdag, Jennifer Elliott, Michaela Erbenova, Alan Feng, Caio Ferreira, Ellen Gaston, Tryggvi Gudmundsson, Anastasia Guscina, Michael Hafeman, Fei Han, Xinhao Han, Thomas Harjes, Sanjay Hazarika, Geoffrey Heenan, Dyna Heng, Henry Hoyle, Benjamin Huston, Gregorio Impavido, Mustafa Jamal, Andy Jobst, Bradley Jones, David Jones, Oksana Khadarina, John Kiff, Ivo Krznar, Suchitra Kumarapathy, Frederic Lambert, Tak Yan Daniel Law, Sheheryar Malik, Alejandro Lopez Mejia, Inutu Lukonga, Hui Miao, Paul Mills, Rebecca McCaughrin, Win Monroe, Nico Marina Moretti, Aditya Narain, Erlend Nier, Evan Papageorgiou, Vladimir Pillonca, Fabiano Rodrigues Bastos, Christian Saborowski, Luca Sanfilippo, Juan Sole, Ilan Solot, Moez Souissi, Nobuyasu Sugimoto, Jay Surti, Narayan Suryakumar, Shamir Tanna, Nico Valckx, Francis Vitek, Jeffrey Williams, Kai Yan, and Ling Zhu. Magally Bernal, Carol Franco, Juan Rigat, and Adriana Rota were responsible for word processing.

Joe Procopio from the Communications Department led the editorial team and managed the report’s production with support from Katy Whipple and Linda Kean and editorial assistance from Michelle Chen, Lucy Scott Morales, Sherrie Brown, Gregg Forte, EEI Communications, and AGS (an RR Donnelley Company).

This particular edition of the GFSR draws in part on a series of discussions with banks, securities firms, asset management companies, hedge funds, standards setters, financial consultants, pension funds, central banks, national treasuries, and academic researchers.

This GFSR reflects information available as of March 25, 2016. The report benefited from comments and suggestions from staff in other IMF departments, as well as from Executive Directors following their discussion of the GFSR on March 28, 2016. However, the analysis and policy considerations are those of the contributing staff and should not be attributed to the IMF, its Executive Directors, or their national authorities.

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