IMF Highlights Risks to Global Financial Stability

The International Monetary Fund (IMF) has issued a stark warning in its latest report, indicating that major geopolitical risks, including trade wars, could significantly destabilize global financial markets. "Stock prices may see a substantial decline, and sovereign risk premiums could rise sharply following major geopolitical events, particularly international military conflicts," the IMF noted.

Vulnerabilities Exposed

The report emphasizes that countries with limited fiscal and international reserve buffers are especially vulnerable to increases in sovereign risk premiums. Such developments could adversely affect the stability and intermediation capacity of banks and non-bank financial institutions, including investment funds, and lead to heightened market volatility.

A Call for Caution

IMF Managing Director Kristalina Georgieva has previously warned about the risks posed by U.S. President Donald Trump's tariffs, describing them as a "significant" threat to the global economic outlook. She urged nations to avoid actions that could further harm the world economy.