IMF has released the Global Financial Stability Report for April 2023

The report published by the International Monetary Fund (IMF) mentioned that the global financial system has been in financial stability since October of last year and that financial stability risks are increasing. Accordingly, the report emphasized that the bankruptcies of Silicon Valley Bank and Signature Bank in the US, as well as the decrease in trust in Credit Suisse followed by its acquisition by UBS, will serve as a strong reminder of the challenges faced.

The report also noted that new technologies strengthened by social media have led to events quickly affecting all banks and financial markets worldwide, causing the sale of risky assets. It was also pointed out that all of this has led to a significant repricing of expectations for monetary policy interest rates, comparable in size to the Black Monday in 1987.

The report indicated that policymakers' responses to stop systemic risks have reduced market concerns to some extent. "However, market confidence remains fragile, and tensions are still visible in a number of institutions and markets as investors reassess the basic health of the financial system," the report said.

The report also focused on the fundamental issue between market participants and policymakers. It evaluated the possibility of another situation that will retest the system after the recent events, or the difficulties brought by harsher monetary and financial conditions after more than a decade of abundant liquidity.

The report drew attention to potential grudges in non-bank financial institutions, stating that the sudden changes in the financial systems of large banks are the main reason for this.

The report also used the expression, "Stress in financial markets is making central banks' job harder at a time when inflationary pressures have become more persistent than expected."

The report highlighted that tools aimed at addressing financial stability risks should separate central banks' monetary policy objectives from financial stability objectives, and that central banks should continue to tighten policies to address inflationary pressures.