Geoeconomic and non-bank risks endanger stability, Chan warns
Structural shifts across geoeconomics, non-bank finance and technological disruption are reshaping global financial stability risks, Hong Kong Monetary Authority Deputy Chief Executive Darryl Chan warned at a joint workshop in Hong Kong on July 13, 2026.
Three structural shifts reshaping systemic risk
Chan outlined three core structural forces transforming how systemic risks emerge and propagate across borders.
First, geoeconomic shocks such as trade conflicts, regional tensions and energy shocks heighten uncertainty while limited fiscal space constrains public sector buffers.
Second, the non-bank financial intermediation sector has expanded rapidly to account for roughly half of the global financial system.
This less regulated sector harbors hidden leverage and liquidity mismatches that can severely compound market stress during crises.
Third, artificial intelligence brings unprecedented productivity potential alongside systemic cyber risks, including autonomous exploitation of critical financial infrastructure.
Together, these factors mean financial vulnerabilities now interact in highly unpredictable ways across jurisdictions.
Building shock absorbers through global cooperation
To address these evolving threats, Chan emphasized that central banks must focus on building resilience and fostering international cooperation.
Building resilience requires relentless risk surveillance, comprehensive scenario planning and forward-looking supervision to future-proof financial infrastructure.
Furthermore, because no jurisdiction can achieve stability in isolation, sustained multilateral collaboration remains essential.
Deepening knowledge exchange among central banks, the BIS, the IMF, and market participants helps convert unknown systemic vulnerabilities into manageable risks.
Diagnosis correct, execution uncertain
Chan accurately points out that non-bank leverage and AI threats now outpace traditional oversight.
Yet urging global cooperation rings hollow as geopolitical rifts fracture multilateral regulatory consensus.
Without concrete enforcement mechanisms, such warnings will do little to prevent the next crisis.