FSB warns of rising financial vulnerabilities, urges reform implementation

The 2025 Annual Report marks a year of profound shifts in the global landscape, underscoring the critical importance of the FSB's mandate.

Despite increasing fragmentation and unpredictability, the financial sector has demonstrated resilience, a testament to post-global financial crisis reforms.

However, the system is transforming, presenting new challenges from the rapid growth of private finance, increasing leverage in core markets, expansion of digital assets, and advancements in artificial intelligence.

The FSB finalised recommendations to address leverage in nonbank financial intermediation and assessed the implementation of crypto-asset and stablecoin recommendations.

A strategic review launched in 2025 revealed a slowdown in G20 reform implementation, with full, timely, and consistent progress not yet achieved across all areas.

Ongoing surveillance highlights persistent vulnerabilities, including rising sovereign debt levels and increasing debt servicing costs, which could amplify volatility in government bond markets.

High corporate and household debt in some jurisdictions also remains a concern.

Nonbank financial intermediation (NBFI) continues to expand faster than the banking sector, with complex interlinkages and opacity making comprehensive vulnerability assessments challenging.

Leverage in certain nonbank investors and liquidity mismatches in open-ended funds warrant continued monitoring.

The FSB's review of its 2023 global regulatory framework for crypto-asset activities revealed significant gaps and inconsistencies.

While efforts to enhance cross-border payments have progressed, tangible improvements for end-users are yet to materialise.