IMF warns debt, energy shock strain global finances now | JQJO

Washington: The International Monetary Fund said global financial markets have so far absorbed volatility from the Middle East conflict without major disruption, presenting its Global Financial Stability Report. IMF Financial Counsellor Tobias Adrian said markets have functioned in an orderly manner, with no widespread margin calls or forced deleveraging, and that banks remain well capitalised and liquid. He warned, however, that elevated public and private debt, rollover risks and the growing role of non-bank financial institutions could amplify stress and destabilise markets if conditions worsen.

Adrian also noted that policy space has been drawn down in many countries after years of crisis support, urging authorities to monitor risks closely and be ready to inject liquidity if needed. The IMF said the conflict has pushed up oil prices and lifted near-term inflation expectations, though markets currently see longer-term expectations as anchored. Emerging markets face added pressures from volatile capital flows and higher energy costs, while the IMF flagged risks from artificial intelligence and cybersecurity and called for stronger regulatory and operational readiness. On private credit, the report judged default risk manageable for now, with mechanisms such as redemption gates helping limit systemic spillovers.