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From Chapter One:
Global Stability Assessment
For the first time since the October 2008 Stability Report, risks to global fi nancial stability have increased, signaling a partial reversal in progress made over the past three years. The pace of the economic recovery has slowed, stalling progress in balance sheet repair in many advanced economies. Sovereign stress in the euro area has spilled over to banking systems, pushing up credit and market risks. Low interest rates could lead to excesses as the “search for yield” exacerbates the turn in the credit cycle, especially in emerging markets. Recent market turmoil suggests that investors are losing patience with the lack of momentum on fi nancial repair and reform. Policymakers need to accelerate actions to address longstanding financial weaknesses to ensure stability.
