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.
Tightening of financial conditions
Significant increases in debt burdens
Weaker bank intermediation capacity and profitability
Liquidity concerns among vulnerable non-banks