Global financial stability refers to a state where the international financial system operates effectively without severe disruptions that could impede economic activity. It implies resilience against shocks and the ability of financial markets and institutions to perform their essential functions. Maintaining this stability is a primary objective for international economic policy. It underpins confidence in the global economy.
Context
The rapid expansion of digital assets and decentralized finance has introduced new considerations for global financial stability, prompting scrutiny from international bodies. News reports often cover discussions among central bankers and regulators about potential systemic risks posed by large stablecoin arrangements or highly interconnected crypto markets. Policy responses aim to integrate digital assets safely into the broader financial system, addressing potential vulnerabilities.
Uneven global implementation of FSB standards creates systemic risk and regulatory arbitrage, compelling firms to prioritize cross-jurisdictional compliance convergence.
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