Archive Signal
IMF GFSR — FX markets and EM bond structure shape shock transmission
The IMF’s framing highlights how FX market structure and local bond dynamics influence crisis propagation. This is actionable for risk teams: stress scenarios should model market functioning, not just macro variables.
Published
07 October 2025
Reader guide
How to read this Signal
Evidence → Uncertainty → Trigger → Decision implication
Read the sourced change first, then the unresolved evidence, the trigger to watch and the implication for the decision.
See the full Approach →Decision-relevant statements
Key points
- →Market structure affects liquidity and the speed of repricing.
- →Local bond investor bases can amplify or dampen shocks.
- →Stress testing should incorporate market functioning indicators.
Control
Actions
- 01Add a ‘market functioning’ layer to EM stress tests (liquidity, dealer capacity, funding spreads).
- 02Review hedging governance and counterparty concentration quarterly.
Source record
Sources and evidence
- 01IMF — Global Financial Stability Report (October 2025) — published 07 October 2025; accessed 07 October 2025