NEW YORK - The International Monetary Fund (IMF) has published its Global Financial Stability Report, warning that risks to global financial stability are growing as a result of the current situation in the Middle East.

„The global financial system faces an ongoing war in the Middle East, potential inflationary pressures, growing risks of further financial tightening, and multiple channels through which market turbulence could spill over into financial instability,“ uvádí zpráva.

The longer the conflict lasts, the greater the risk that global financial conditions will tighten further and suddenly.

The report identifies several channels that could test the resilience of the financial system and lead to risks to financial stability.

  • First, higher volatility in bond markets could tighten financing conditions, as rising debt-to-GDP ratios lead to larger swings in bond yields.
  • Second, emerging markets may face pressure on currencies and capital outflows due to the unwinding of carry trade strategies and deteriorating terms of trade.
  • Third, the sudden tightening of financial conditions may lead to forced selling by hedge funds, options dealers, leveraged exchange-traded funds and other non-bank financial institutions that have grown through the use of leverage.
  • Fourth, the rising number of non-performing loans in private finance may raise broader concerns about corporate credit, particularly for heavily indebted firms exposed to AI disruption.

The report also warns that soaring investment in AI could slow significantly if the conflict in the Middle East persists.

The IMF called on policymakers to take decisive action to build resilience in the context of the Middle East conflict. It recommended that monetary policy should maintain price stability and respond to spillovers from actual inflation into inflation expectations, while remaining data dependent.

It also recommends adjusting fiscal policy towards a reasonably restrictive stance that will help stabilise public debt and focusing new spending on protecting vulnerable groups from inflationary shocks.

According to the report, it is also crucial to close data gaps, improve information sharing between jurisdictions and strengthen supervision, especially as non-bank financial institutions are increasingly leveraged and interconnected with banks.

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