The International Monetary Fund (IMF) has warned that Artificial Intelligence (AI) market corrections, rising energy prices and bond market shocks could threaten global financial stability.

The Deputy Director, Monetary and Capital Markets Department, IMF, Athanasios Vamvakidis, gave the warning while presenting the Global Financial Stability Report in Thailand on Tuesday.

The report was presented at the ongoing 2026 World Bank/ International Monetary Fund annual meetings in Bangkok, Thailand.

Vamvakidis said that banks remained resilient under severe stress tests but warned that some institutions could face undercapitalisation and financial distress.

He said vulnerable banks were particularly exposed to market shocks involving non-bank financial institutions (NBFIs).

Vamvakidis also identified growing risks in pension funds, insurance companies, private credit markets and hedge funds.

He said that pension funds and insurers were increasingly exposed to illiquid assets, which could create challenges during periods of market stress.

Vamvakidis said that in private credit markets, rising borrower leverage could trigger financial pressure and restrict credit availability.

He said that hedge funds’ increasing leverage and crowded investment positions could amplify market shocks during periods of financial stress.

He said emerging markets had remained resilient, supported by strong economic fundamentals, sound policies and favourable global investor appetite.

According to him, intensifying bond market sell-offs can threaten emerging economies, particularly those with weakening financial buffers and limited access to transparent funding sources.

He urged policymakers to strengthen financial system resilience before new shocks emerged.

“Persistent inflation, renewed price pressures and growing public debt have reduced governments’ capacity to respond to future economic shocks.

“Governments need to address fiscal imbalances and restore public debt to sustainable levels.

“Monetary authorities should prioritise price stability, communicate clearly and preserve their independence to maintain credibility and anchor long-term inflation expectations,” he said.

He further called for stronger cybersecurity and improved supervision of non-bank financial institutions to identify and address systemic risks.

Vamvakidis said that strengthening financial resilience was critical to safeguarding global stability amid growing economic and market uncertainties.

The Assistant Director, Monetary and Capital Market Department, IMF, Joson Wu, said that the improved inflation indicators suggested that a less restrictive monetary policy stance might be appropriate.

Wu said that the policy credibility, clear communication and decisions based on economic data remained essential to containing inflationary pressures.

He also urged Nigerian authorities to strengthen banking sector resilience through adequate capital and liquidity requirements, alongside timely recognition of bad loans.

He urged emerging economies to introduce appropriate regulations after bank recapitalisation to prevent future financial risks.

Wu identified banks’ exposure to government debt, known as the sovereign-bank nexus, as another critical risk requiring close monitoring.

He said that on Nigeria’s Eurobond market, the international markets remained open, with financing activities continuing.