The International Monetary Fund has warned that market corrections linked to artificial intelligence, rising energy prices and bond market shocks could threaten global financial stability. The warning was issued by the IMF Deputy Director of Monetary and Capital Markets, Athanasios Vamvakidis, during the presentation of the Global Financial Stability Report in Thailand on Tuesday.
The report was presented on the sidelines of the 2026 IMF and World Bank Group Annual Meetings. Vamvakidis said banks remained resilient under severe stress tests but cautioned that some institutions could face inadequate capital and financial distress, particularly if exposed to shocks involving non-bank financial institutions.
He identified pension funds, insurance companies, private credit markets and hedge funds as areas of growing concern. Pension funds and insurers face risks from increased exposure to illiquid assets, while rising borrower debt in private credit markets could trigger financial pressure and restrict access to credit. Increasing leverage and crowded investment positions among hedge funds could also worsen market shocks.
Vamvakidis said emerging markets had remained resilient due to strong economic fundamentals, sound policies and favourable investor sentiment. However, he warned that intensified bond market sell-offs could threaten countries with weakening financial buffers and limited access to transparent funding sources.
He urged governments to address fiscal imbalances and restore public debt to sustainable levels, noting that persistent inflation, renewed price pressures and rising public debt had reduced their capacity to respond to future economic shocks. He also called on monetary authorities to prioritise price stability, communicate clearly and maintain their independence to preserve public confidence.
The IMF official further recommended stronger cybersecurity and improved supervision of non-bank financial institutions to identify and manage systemic risks. Assistant Director of the IMF Monetary and Capital Markets Department, Joson Wu, said improving inflation indicators could support a less restrictive monetary policy stance, while stressing the importance of policy credibility and decisions based on economic data.
Wu also urged Nigerian authorities to strengthen banking sector resilience through adequate capital and liquidity requirements and timely recognition of bad loans. He identified banks’ exposure to government debt, known as the sovereign-bank nexus, as a risk requiring close monitoring, while noting that international markets remained open to Nigeria’s Eurobond financing activities.
