Financial stability can be defined as a condition in which the financial system – which comprises financial intermediaries, markets and market infrastructures – is capable of withstanding shocks and the unravelling of financial imbalances.
This mitigates the prospect of disruptions in the financial intermediation process that are severe enough to adversely impact real economic activity.
Disorderly increase in risk premia
Debt sustainability concerns
Hampered bank intermediation capacity
Increased risk-taking in the non-bank financial sector