First Financial Stability Forum met in Paris

06 September 2006

The Financial Stability Forum met in Paris to discuss the risks and vulnerabilities in the international financial system and reviewed ongoing work to strengthen financial system stability and resilience. The FSF noted that the economic outlook remains broadly supportive of financial stability. Financial firms have strong balance sheets, and financial systems seem to be adapting well to the ongoing removal of accommodation in monetary policy in many countries and to shifts in the balance of demand among the major economies.

Members pointed to several areas of concern with the potential to cause strains in financial systems. These include the capacity of households in some countries to manage rising debt levels and possible adjustments in housing markets, the rapid pace of leveraged buyouts and debt-financed acquisitions, the growing complexity of financial instruments, and persistent global current account imbalances. Financial market participants need to take account in their risk analysis and pricing of the full implications of a possible reversal of the current benign conditions, including less liquid markets.

The next meeting of the Financial Stability Forum will be held in Frankfurt on 29 March 2007

Press release

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