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.
Strength of some asset prices and possible market corrections
Growing fragilities in non-financial sectors
Weaker bank profitability amid expected higher credit losses
Renewed risk-taking by non-banks