Today the International Monetary Fund announced the release of the fourth issue of its *Global Financial Stability Report*, a quarterly publication launched in March 2002. The report, prepared by the International Capital Markets Department of the IMF, provides a regular assessment of global financial markets and identifies potential systemic weaknesses that could lead to crises.

By calling attention to potential fault lines in the global financial system, the report seeks to play a role in preventing crises before they erupt, thereby contributing to global financial stability and to the prosperity of the IMF’s member countries.

An introduction to the Report indicates that this particular issue draws, in part, on a series of informal discussions with commercial and investment banks, securities firms, asset management companies, insurance companies, pension funds, stock and futures exchanges, and credit rating agencies in Brazil, Chile, China, Germany, Hong Kong SAR, Hungary, Italy, Japan, Poland, Russia, Singapore, Switzerland, Thailand, the United Kingdom, and the United States. The report reflects mostly information available up to November 4, 2002.

The Global Financial Stability Report replaces two IMF publications: the annual International Capital Markets Report (published since 1980) and the quarterly Emerging Market Financing Report (published since 2000). The report was created to provide a more frequent assessment of global financial markets and to address emerging market financing in a global context. As a quarterly, it focuses on relevant contemporary issues and on drawing out the financial ramifications of economic imbalances highlighted by the IMF’s World Economic Outlook.

Although noting that financial market developments during the period under review could be characterised by heightened investor risk aversion and that higher-risk corporate and sovereign borrowers continued to face difficult financing conditions, the International Capital Markets Department said *“Nevertheless, the global financial system so far has remained resilient. Markets, while unusually volatile, remained orderly and the financial system functioned smoothly.”* This notwithstanding, it is necessary to take steps to rebuild confidence, restore calmer financial markets and maintain financial stability, recommended the Department.

Note: Click on to Special Reports from the Home Page for a link to the full Global Financial Stability Report.