Global Financial Stability Report Update: Financial Conditions Have Eased, but Insolvencies Loom Large
Amid huge uncertainties, a disconnect between financial markets and the evolution of the real economy has emerged, a vulnerability that could pose a threat to the recovery should investor risk appetite fade.Other financial system vulnerabilities may be crystallized by the COVID-19 pandemic. High levels of debt may become unmanageable for some borrowers, and the losses resulting from insolvencies could test bank resilience in some countries. Some emerging and frontier market economies are facing refinancing risks, and market access has dried up for some countries. Authorities, while continuing to support the real economy, need to closely monitor financial vulnerabilities and safeguard financial stability.