So how is the global financial system doing? It’s a barometer of how strong or weak the world’s financial system is. It also lays out the biggest risks that could assail global markets. The biannual International Monetary Fund Global Financial Stability Report It alerts countries to where threats might emerge and how they can respond to them. It also measures how wars, inflation, debt and falling growth have been affecting the world’s economy. It’s about a rising global debt, wobbly financial markets and a significant amount of global economic risk in 2025. Also, it raises an alarm bell for a global liquidity crisis and a bad global macro economy.
IMF Global Financial Stability Report
Good paper: IMF Global Financial Stability Report Training data ends with information prior to October of 2023. This report checks the global financial system and says what might be at risk. It allows governments, banks and individuals to know where the threat is. The 2025 report sounds the alarm about the rising risks to financial stability around the world. It offers details on hazardous debts, surging inflation, interest rates and vulnerable financial institutions.
IMF Global Financial Stability Report (GFSR)
This report was produced by the International Monetary Fund (IMF) for its work of policing the global financial system. This is the International Monetary Fund (IMF) version of financial surveillance. And it keeps countries alert for financial shocks. It shows where the weak links are and where the fortitude is. The report provides early warnings that allow countries to react swiftly. It simply tells India and others when to turn the wrench more loosely or tightly.”
The 2025 report is kind of a big deal: It deals, among other things, with:
- What’s happening in the global financial systems
- Risks to financial stability
- Problems in banks and markets
- Bottom line: macroeconomic issues like debt and inflation
- Overseas inflation and asset prices and capital flows
And although many countries are now growing, risks remain elevated, this year’s report said. The interest rates were increased by the central banks. That has made borrowing harder. That caused a lot of pain to a lot of small banks and companies.
The IMF also cautioned that banks and investors must stay vigilant. Most companies have significantly more debt now. That they might not pay back if growth slows. This is how you have a worldwide liquidity crisis.
This report needs to be taken into account in full caution by India. Hence, how the foreign markets impact Indian markets. If US interest rates rise, money flows out of India. That makes the rupee fall. This acts as a mechanism for the Reserve Bank of India to regulate the inflation rate and money supply.
Also, lastly, the IMF Global Financial Stability Report is not just a piece of paper. It is a warning system. It is a kind of medical check-up of the world’s money machine. It is used by banks and governments to protect themselves.
How Global Economic Risks Weigh on the Financial Stability Outlook?
Even with those guardrails, the 2025 Global Financial Stability Report highlights material risks to the global economy. And this is a world with a lot of problems. If not remedied, these risks can be quite troublesome. But these threats can threaten each and every country including India.
Ways Global Economic Shocks Haunt 2025
The biggest risks this year are from inflation, or from high debt, weak banks, wars and climate disasters. Those and other factors are making it harder for countries to grow. The report says most nations are still dealing with COVID-19 recovery. But new problems keep coming.
Inflation and interest rates remain the primary risk. In much of the world, prices skyrocketed. So interest rates went up from central banks. That made loans expensive. People and businesses reduced their spending. This hurt growth and profits.
War and geopolitics also affect the international financial landscape. Nor will Ukraine’s war — and a cold war between China and the United States — make it easier to do trade. Many countries stopped trading freely. That led to shipping delays in the supply chain.” This made raw materials expensive and hard to come by.
Climate change and other disasters also pose threats to financial stability. Floods, and heatwaves and droughts, destroy crops and homes. Countries must step up investments in recovery. And so some insurance companies pay out more than they take in. That adds to the pressure on banks.
What These Risks Mean for Financial Stability?
Each one of the above exacerbates those financial stability risks. More borrowers delinquent on loans — that would damage banks. Stock markets become shaky. People sell shares quickly. Most safer havens (e.g. golden, US bonds), Investors (all colors), Investors (domestics, foreigners) leap.
India needs to watch these risks carefully. A little shake in one country can vibrate through several others. And when banks there collapse, people here also lose money in mutual funds. That’s how a problem in one country is a problem everywhere.
Regulators should keep stringent rules for banks, the IMF says It recommends central banks prepare for such emergencies. Claim damages can be limited if they spring into action immediately. But if they wait too long, the crisis spreads rapidly.
It goes so far as to warn about the economic vulnerability index. This is an index of a country’s weakness. Countries with high debt, bad governance or low reserves will score high on this index. Countries of that sort can get into crisis pretty quickly.
Simply put, life is way more dangerous now. Inflation, or war, or weather disasters, can break even strong finance systems. Which is one reason why the Global Financial Stability Report is so prescriptive. That keeps both countries strong and avoids hurting each other.
This section of the Global Financial Stability Report offers a detailed evaluation of developments in global debt and financial markets. The report also finds that world debt is now higher than it was at the peaks before the pandemic. This is not good news.
Major Bank Collapse
In 2025, the world had roughly $315 trillion in debt. That is more than three times the GDP of the planet. Both rich and poor countries are deeply in debt. Covid-19 led more governments to go deeper into debt to help people. But now, they must repay.
The report also found that a lot of companies went into too much debt. Now they are low on funds and are having difficulty repaying loans as the interest rates are high. Many companies may default if the economy slows, IMF warns That could hurt banks and jobs.
That puts developing countries like India in a bind. They’ve got to grow like crazy, but they’ve also got to rein in debt.” India’s debt is under control.” But if the rupee falters or exports cool, that debt can become a burden.
Here is an example table in the report:
| Country Group | Debt-to-GDP Ratio | Main Risk |
| Advanced Economies | 112% | Slow growth, ageing |
| Emerging Markets | 68% | Currency risk, high rates |
| Low-Income Nations | 49% | External debt, climate |
Financial Market Trends in 2025
The report also keeps up with financial market trends. Wait, it’s telling that stock markets are booming. But this is risky. A lot of prices go up without strong business at a company. This may lead to bubbles. When such a bubble pops, millions can pay the price.
- Global macroeconomic conditions have also been reported weak, the report notes. After all, numerous countries still endure high inflation and jobless growth. Markets can swing wildly in those circumstances. As a result, even ordinary people struggle to invest safely.
- Hence similar problems are faced by Indian market. America raises interest, foreign investors pull their money. This is one of the reasons the Sensex and Nifty have fallen. The rupee also gets weak. Saudis have put in five minutes on mutual Olympic dollars and their shares.
- The I.M.F. urges countries to remain on guard about markets, and not let them exceed their value. It also calls for regulators to rein in risky loans and control shadow banks. They are unsystematic lenders that bail out without rules.
- The message of the 2025 report is unambiguous. It says the world must reduce debt and monitor markets closely. If we do not act now, the next crisis comes sooner, and is worse.
Relevance to ACCA Syllabus
Global organisations’ health are pivotal to the countries they operate in, and to their accounting sectors – ACCA (Association of Chartered Certified Accountants) for eg utilise the Global Financial Stability Report to carve a path for students through international markets/systemic risks to financial reporting/decisions. The ACCA syllabus covers IFRS that may be different depending on economies across the world and their climate. This is useful in informing the areas of exam such as Strategic Business Reporting (SBR) and Financial Management (FM), and also provides insight into financial systems.
Global Financial Stability Report ACCA Questions
Q1- Country specific components of International financial reporting & analysis of economic risk area of ACCA syllabuss.
A) Strategic Business Reporting (SBR)
B) Advanced Auditor (IIA)
C) Performance Management (PM)
D) Audit and Assurance (AA)
Ans: A)Strategic Business Reporting (SBR)
Q2: What does the Global Financial Stability Report mainly cover?
A) All over the world, employers were looking for this trend
B) Climate finance, and sustainability
C) Assessment of threats to the world financial system
D) Case law of multinational organizations
Ans: C) Assessment of threats to the world financial system
Q3: Which bill moving through Congress could have significant implications for the regulation of financial institutions?
A) IFRS 7
B) IFRS 13
C) IFRS 16
D) IFRS 5
Ans: A) IFRS 7
Q4: What is a notable area of risk in times of global financial uncertainty is the Global Financial Stability Report’s mantra?
A) Tax compliance risks
B) Operational inefficiencies
C) A liquidity and credit risk of the markets
D) Problems related to employee retention
Ans:C) A liquidity and credit risk of the markets
Q5: Which one of the following is an example of macro prudential policy tool?
A) Interest rate subsidy
B) Loan-to-value ratio limit
C) Payroll tax deduction
D) Income tax exemption
Ans: B) LTV ratio cap
Relevance to US CMA Syllabus
To be eligible for the CMA US exam, you must complete a preparatory course on financial planning, performance and control. The Global Financial Stability Report highlights systemic financial vulnerabilities, financial market and liquidity developments for CMA students. This enables decision making, risk assessment and financial strategies which is in line with Part 2 of the CMA syllabus: Strategic Financial Management.
Global Financial Stability Report CMA Questions
Q1: Which Part is the Global Financial Stability Report in the CMA exam?
A) Financial Reporting
B) Performance Management
C) Financial Management with Strategy
D) Internal Auditing
Ans: C) Strategic Financial Management
Q2: Which of the following do you often emphasize in the Global Financial Stability Report?
A) Local tax policy
B) Exchange rate manipulation
C) Systemic financial risks
D) Cost overruns on small businesses
Ans: (C) Systemic financial risks
Q3: What concept allows a CMA to measure how the markets respond to the upheaval of the world economy?
A) Capital budgeting
B) Scenario analysis
C) Lean manufacturing
D) Overhead absorption
Ans: B) Scenario analysis
Q4 What one risk leapt out for you for investors and and for firms within these financial stability reports?
A) Reputation risk
B) Interest rate volatility
C) Supply chain disruption
D) Labor turnover
Ans: Risk of rate of interest
Q5: World Financial Crisis Role of Finance Manager
A) Reduce fixed assets
Q) A) Until October 2023, you are profiled;
C) Review of capital structure and liquidity position
D) Increase inventory
Ans: C) Assessing capital structure & liquidity position
Relevance to US CPA Syllabus
In the United States, the CPA curriculum has three parts: auditing, financial reporting, and regulation. The Global Financial Stability Report also helps to advance work trends macroeconomic vulnerabilities, regulatory challenges, and financial institution reporting. Again, CPA candidates Global Financial Stability Report — Provides analytical groundwork for work on macroeconomic vulnerabilities, regulatory challenges, and financial institution reporting. CPA candidates use this again in Financial Accounting and Reporting (FAR) and Business Environment and Concepts (BEC) in assessing risk in the context of periodic reporting and audit work.
Global Financial Stability Report CPA Questions
A1: The CPA Exam Part 2 includes content that relates to the testing of the CPA Exam on global economic impacts on capital market region reporting.
A) REG
B) BEC
C) AUD
D) ETH
Ans: B) BEC
Q2: What is a financial stability concern of these as listed in the report?
A) REDUCING PUBLIC SECTOR JOBS
B) Real estate price bubbles
Three) New sales commission policy
D) Rules for the retailing industry
Ans: B) Price bubbles in real estate
Q3: If global risk goes up, what should a CPA consider at the time of the evaluation?
A) Profit-sharing schemes
B) Stakeholder dividends
C) Risk disclosures on financial statements
D) Direct labor hours
Ans: C) Financial statement risk disclosure
Q4: What is the most market-sensitive element of your financial reporting?
A) Depreciation schedules
B) Net book value
C) Fair value measurements
D) Accrued wages
Ans: (C) Fair value measurements
Q5: Which institution publishes the Global Financial Stability Report?
A) SEC
B) FASB
C) IMF
D) IRS
Ans: C) IMF
Relevance to CFA Syllabus
Economics and financial analysis are taught alongside portfolio management as a part of the CFA curriculum. CFA curriculum covering global markets, financial risk, asset valuation, and investment strategy aligns with the Global Financial Stability Report. This helps CFA students to evaluate macroeconomic conditions impacting tenability options and fiscal stability on a global scale.
Global Financial Stability Report CFA Questions
Q1: What is the most directly related CFA exam topic that Greening the Financial System is informing?
A) Derivatives
B) Economics
C) Ethics
D) Quantitative Methods
Ans: B) Economics
Q2: What is the relevance of financial stability risks to portfolio managers?
A) Increase profit margin
A) increased need for diversification
C) Expectation at the risk adjusted return
D) Increase employee benefits
Ans: C) Affect risk-adjusted return expectations
Q3: What type of risk do the Global Financial Stability Report largely suggest?
A) Operational risk
B) Compliance risk
C) Systemic risk
D) Legal risk
Ans: C) Systemic risk
Q4: What do we call the panic caused by this coming end of liquidity in the market?
A) Monetary easing
B) Credit crunch
C) Tax arbitrage
D) Dividend reinvestment
Ans: B) Credit crunch
Q5: What is one indicator that could reflect worries in Global Financial Stability Report?
A) Consumer Price Index (CPI)
B) Balance of payments
C) Volatility index (VIX)
D) Job satisfaction rates
Ans: C) Volatility index (VIX)
