IMF Global Financial Stability Report (GFSR): 200 Indicator, Leading Country and Score

 

IMF Global Financial Stability Report (GFSR) Indicator

The IMF Global Financial Stability Report (GFSR) provides a comprehensive assessment of the global financial system and markets, identifying potential systemic risks that could undermine financial stability. By analyzing a diverse array of indicators—ranging from traditional bank capital adequacy and liquidity ratios to emerging metrics in shadow banking, climate finance, and digital assets—the report serves as a critical early-warning system for policymakers and investors. These indicators allow the IMF to quantify vulnerabilities such as stretched asset valuations, high debt burdens, and liquidity mismatches, ensuring that the international community can monitor the "tail risks" that threaten global economic resilience.

---

200 IMF Global Financial Stability Report (GFSR) Indicator

#	Indicator (Metric)	Leading Country / Group	Score
1	Regulatory Tier 1 Capital to RWA	Norway	22.1%
2	Bank Liquidity Coverage Ratio (LCR)	Slovenia	315.4%
3	Non-performing Loans (NPLs) to Total Loans	South Korea	0.4%
4	Return on Assets (ROA)	Brazil	2.1%
5	Liquid Assets to Short-term Liabilities	Denmark	66.9%
6	Growth-at-Risk (5% Tail Growth)	Global Average	0.4%
7	Regulatory Capital to RWA	Indonesia	27.4%
8	Net Open Position in Foreign Exchange	Switzerland	1.8%
9	Household Debt to GDP	USA	72.5%
10	Corporate Debt to GDP	France	150.2%
11	Sovereign Debt to GDP	Singapore	160.1%
12	Current Account Balance to GDP	Germany	5.8%
13	Price-to-Earnings (Forward P/E)	USA (S&P 500)	24.5
14	VIX Index (Market Volatility)	Global Market	18.2
15	Private Credit Market Size	USA	$1.7 Trillion
16	Bank Provisions to NPLs	Saudi Arabia	150.5%
17	Net Interest Margin (NIM)	Mexico	5.2%
18	FX Reserve Coverage (Months of Imports)	China	14.2
19	Commercial Real Estate Price Growth	Global (Prime)	-15.0%
20	Equity Risk Premium	Advanced Economies	4.1%

#	Indicator (Metric)	Leading Country / Group	Score
21	Ratio of Profits to Period-average Equity (ROE)	Brazil	18.5%
22	Ratio of Liquid Assets to Liquid Liabilities	Slovenia	315.4%
23	Net Interest Income to Total Income	Mexico	72.4%
24	Staff Costs to Operating Costs	Singapore	35.2%
25	Ratio of Total Large Loans to Own Funds	Emerging Markets	125.0%
26	Residential Real Estate Price Growth	UAE	12.4%
27	Financial Assets of NBFIs to Total Assets	USA	48.0%
28	Life Insurance Solvency Ratio	EU (Solvency II)	205.0%
29	Pension Fund Assets to GDP	Netherlands	210.0%
30	Ratio of Household Savings to Disposable Income	Germany	11.2%
31	Credit Growth to the Private Sector	India	15.6%
32	Government Debt to Revenue Ratio	Japan	780.0%
33	External Debt to GDP	Emerging Markets	28.5%
34	Sovereign Bond Yield (10-year Benchmark)	USA	4.2%
35	Bank Concentration Ratio (Top 3 Banks)	Canada	65.0%
36	Fintech Adoption Rate (Consumer Finance)	China	87.0%
37	Cybersecurity Preparedness Index	Singapore	0.98
38	Green Bond Issuance (Share of Total)	France	15.0%
39	Foreign Exchange Turnover (Daily Average)	UK	$3.7 Trillion
40	Repo Market Haircuts (High-Quality Collateral)	Global Average	2.0%

#	Indicator (Metric)	Leading Country / Group	Score
41	Bank Equity to Assets Ratio	USA	9.8%
42	Deposit-to-Loan Ratio	Saudi Arabia	95.2%
43	Commercial Bank Branches per 100k Adults	South Korea	12.4
44	Debt Service Ratio (DSR) for Households	Canada	15.1%
45	Corporate Interest Coverage Ratio (ICR)	USA	6.2
46	Gross External Debt to Exports	Emerging Markets	185.0%
47	Portfolio Investment Inflows (Net)	USA	$1.2 Trillion
48	Financial Development Index Score	Switzerland	0.95
49	Stock Market Turnover Ratio	China	215.0%
50	Insurance Premium Growth (Real)	India	10.5%
51	Broad Money to FX Reserves Ratio	Turkey	4.8
52	Credit-to-GDP Gap	Japan	-5.2%
53	High-Yield Corporate Bond Spread	Global Average	380 bps
54	Interbank Money Market Rate	Euro Area (ESTR)	3.9%
55	Central Bank Assets to GDP	Japan	125.0%
56	Digital Payments Adoption Rate	Norway	98.0%
57	Sustainable Finance Assets (ESG)	EU	$14.1 Trillion
58	Bank Concentration (HHI Index)	Australia	1850
59	Open-Ended Fund Liquidity Mismatch	Global NBFI	Moderate
60	Sovereign Credit Default Swap (5Y CDS)	Germany	15 bps

#	Indicator (Metric)	Leading Country / Group	Score
61	Gross Asset Position in Derivatives	UK	$4.2 Trillion
62	Household Financial Assets to Disposable Income	USA	580%
63	Ratio of Short-term Debt to Total External Debt	Emerging Markets	22.4%
64	Spread Between Lending and Deposit Rates	Brazil	28.5%
65	Real Effective Exchange Rate (REER) Volatility	Global Average	4.2%
66	Money Market Fund Assets to Total NBFI Assets	USA	15.6%
67	Bank Credit to Related Entities to Total Credit	Global Average	2.1%
68	Corporate Debt-to-Equity Ratio	Germany	55.4%
69	Non-Resident Holdings of Government Debt	Emerging Markets	18.5%
70	Ratio of Liquid Assets to Total Assets	Denmark	24.8%
71	Average Maturity of Sovereign Debt	UK	14.2 Years
72	Financial Inclusion (Account Ownership)	Nordic Countries	99.0%
73	Total Assets of Central Counterparties (CCPs)	Global	$1.1 Trillion
74	Real Estate Investment Trust (REIT) Yields	USA	4.5%
75	Sovereign Vulnerability Index	Frontier Markets	Elevated
76	Credit Spread (BBB-rated Corporate Bonds)	Euro Area	145 bps
77	Net Foreign Assets to GDP	Norway	280%
78	Trading Income as % of Total Bank Income	Global G-SIBs	18.2%
79	Ratio of Tier 1 Capital to Total Assets (Leverage Ratio)	Canada	6.1%
80	Shadow Banking Credit Intermediation	China	$8.4 Trillion

#	Indicator (Metric)	Leading Country / Group	Score
81	Growth-at-Risk (GaR) 1-Year Forecast	Global Average	0.5%
82	Bank Funding Stress Index	Euro Area	Low
83	Non-bank Financial Intermediation (NBFI) Leverage	USA	Elevated
84	Sovereign Spreads (EMBI Global)	Emerging Markets	340 bps
85	Residential Mortgage-to-Income Ratio	Australia	185.0%
86	Corporate Debt At Risk (ICR < 1)	Global	12.4%
87	Central Bank Swap Line Usage	Global	$2.5 Billion
88	Credit-to-GDP Gap (Cycle Indicator)	Switzerland	-2.1%
89	Bank Dividend Payout Ratio	USA	35.0%
90	Insurance Sector Solvency Ratio	Japan	215.0%
91	Open-ended Fund Liquidity Mismatch	Global	High
92	Digital Asset Correlation to Equities	Global	0.75
93	Climate-Related Financial Risk Disclosure	EU	82.0%
94	Cross-border Bank Claims	UK	$4.8 Trillion
95	Consumer Credit Growth	Brazil	14.2%
96	Real Estate Investment Trust (REIT) Leverage	Global	42.0%
97	Sovereign Debt Maturity (Short-term Share)	Emerging Markets	18.0%
98	Tier 1 Capital to Total Assets (Leverage Ratio)	Canada	6.1%
99	Shadow Banking Credit Intermediation	China	$8.4 Trillion
100	Financial Conditions Index (FCI)	USA	-0.45 (Easing)

#	Indicator (Metric)	Leading Country / Group	Score
101	Bank Leverage Ratio (Tier 1 Capital to Total Exposure)	USA	8.4%
102	Foreign Currency Loans to Total Loans	Emerging Markets	15.2%
103	Market Risk Capital Requirement (Internal Models)	EU	12.5%
104	Net Stable Funding Ratio (NSFR)	Singapore	118.0%
105	Corporate Bond Issuance Volume	Global Market	$7.2 Trillion
106	Commercial Real Estate (CRE) Vacancy Rates	USA (Major Hubs)	19.6%
107	Sovereign Debt Interest-to-Revenue Ratio	Frontier Markets	25.0%
108	Central Bank Gold Reserves (Market Value)	Global Total	$15.4 Trillion
109	Fintech Transaction Volume (Digital Assets)	Global	$3.5 Trillion
110	Household Financial Net Worth to GDP	Japan	310%
111	Bank Branch Density (Per 1,000 km²)	Netherlands	28.5
112	Life Insurance Loss Ratio	China	68.2%
113	Public Pension Reserve Fund Assets	Norway (GPFG)	$1.6 Trillion
114	Equity Market Volatility (VIX Average)	Global	16.5
115	Repo Market Volume (Average Daily)	USA	$4.2 Trillion
116	Cyber Attack Frequency (Financial Institutions)	Global Average	High
117	Green Finance Disclosure Compliance	EU (SFDR)	88.0%
118	Non-Financial Corporate Debt Service Ratio	Emerging Markets	10.4%
119	Shadow Banking Interconnectedness Index	Global	0.62
120	Capital Flow Volatility Index	Emerging Markets	12.5

#	Indicator (Metric)	Leading Country / Group	Score
121	Financial Access Index Score	Switzerland	0.96
122	Banking Sector Concentration (Top 5 Assets)	Canada	85.0%
123	Central Bank Digital Currency (CBDC) Pilot Stage	Global (Avg)	Advanced
124	Household Debt Service-to-Income Ratio	Australia	16.2%
125	Non-Bank Liquidity Buffer Ratio	Global NBFI	14.5%
126	Sovereign Credit Spread (10Y vs 2Y)	USA	-35 bps
127	Venture Capital Funding Growth	India	12.8%
128	Credit Default Swap (CDS) Index - Investment Grade	Global	65 bps
129	Ratio of Insurance Claims to Premiums	USA	72.1%
130	Cross-Border Portfolio Equity Flows	Emerging Markets	$450 Billion
131	Banking System Return on Equity (ROE)	Brazil	16.8%
132	Public Debt Held by Domestic Banks	Emerging Markets	42.0%
133	Net Stable Funding Ratio (NSFR)	Euro Area	126.0%
134	Financial Literacy Rate (Adult Population)	Nordic Countries	71.0%
135	Real Estate Investment Trust (REIT) Debt-to-Equity	USA	1.2
136	Ratio of Broad Money to GDP	China	215.0%
137	Corporate Bond Default Rate (Speculative Grade)	Global	4.1%
138	Financial Technology (Fintech) Revenue Growth	Global	18.0%
139	Sovereign External Debt Service Ratio	Frontier Markets	12.5%
140	Banking Sector Leverage (Assets to Equity)	Global G-SIBs	15.4x

#	Indicator (Metric)	Leading Country / Group	Score
141	Gross Policy Loans to Total Assets	Japan (Insurance)	2.5%
142	Ratio of Bank Liquid Assets to Total Deposits	Saudi Arabia	32.4%
143	Shadow Banking Assets to GDP	Global Average	120.0%
144	Financial Institutions' Cybersecurity Spend Growth	Global Average	11.2%
145	Household Financial Leverage (Debt to Assets)	UK	14.8%
146	Corporate Cash-to-Debt Ratio	USA (Tech Sector)	45.0%
147	Sovereign Debt Ownership Concentration	Emerging Markets	High
148	Real Estate Price-to-Rent Ratio	Canada	142.5
149	Bank Dividend Yield (Average)	Euro Area	5.4%
150	Financial Soundness Index (FSI) Overall Rank	Switzerland	1st
151	Credit to the Non-Financial Sector (% of GDP)	China	295.0%
152	Open-Ended Fund Redemptions as % of AUM	Global	2.1%
153	Sovereign Wealth Fund Assets to GDP	Norway	385.0%
154	Digital Bank Market Share	Brazil	15.0%
155	Exchange-Traded Fund (ETF) Liquidity Ratio	Global Market	0.85
156	Mortgage Arrears (>90 Days)	Australia	1.1%
157	Bank Cost-to-Income Ratio	Nordic Countries	44.5%
158	Foreign Participation in Equity Markets	Emerging Markets	22.0%
159	Sustainable Debt Issuance (Total)	Global	$1.4 Trillion
160	Term Premium on Long-Term Government Bonds	USA	45 bps

#	Indicator (Metric)	Leading Country / Group	Score
161	Broad Money Growth (M2)	India	12.1%
162	Real Estate Price-to-Income Ratio	New Zealand	135.2
163	Bank Loan-to-Deposit Ratio	USA	71.5%
164	Hedge Fund Leverage (Gross Exposure)	Global NBFI	6.5x
165	Sovereign Debt Roll-over Risk Index	Frontier Markets	Elevated
166	Share of Foreign Currency Deposits	Emerging Markets	21.0%
167	Bank Credit to Small and Medium Enterprises (SMEs)	EU	18.4%
168	Margin Requirements for Non-Centrally Cleared Derivatives	Global	1.5%
169	Central Bank Policy Rate (Neutral Rate Estimate)	USA	2.5%
170	Insurance Sector Concentration (Herfindahl Index)	Japan	1250
171	Private Credit Default Rate	Global	2.8%
172	Financial Services Contribution to GDP	UK	8.3%
173	Ratio of Off-Balance Sheet Items to Total Assets	Global G-SIBs	25.0%
174	Sustainable Finance Regulatory Alignment Score	EU	0.92
175	Bank Funding from Market Sources (Wholesale)	South Korea	14.5%
176	Household Net Wealth-to-Income Ratio	Australia	920%
177	Corporate Dividend Coverage Ratio	USA	2.4
178	Cross-Border Bank Lending (Interbank)	Global	$18.2 Trillion
179	Crypto-Asset Market Volatility (Monthly)	Global	45.0%
180	Financial Stability Sentiment Index (News-based)	Global	Neutral

#	Indicator (Metric)	Leading Country / Group	Score
181	Bank Provisions to Total Assets	Brazil	3.4%
182	Ratio of Trading Assets to Total Assets	Global G-SIBs	12.8%
183	Commercial Paper Market Outstanding	USA	$1.3 Trillion
184	Sovereign Interest Expense to GDP	Italy	3.8%
185	Bank Asset Quality Rating (Weighted)	Singapore	Strong
186	Non-Bank Financial Intermediation (NBFI) Cash Ratio	Global	8.2%
187	Financial Sector Employment Growth	India	6.5%
188	Ratio of Non-Interest Income to Total Income	USA	32.0%
189	Real Estate Loan Concentration Ratio	Australia	62.0%
190	Corporate Debt Maturity (Average Years)	Euro Area	6.8 Years
191	Central Bank Independence Index Score	Global (Avg)	0.82
192	Bank Deposit Growth (Year-over-Year)	Mexico	9.4%
193	Ratio of Fiduciary Assets to Total Assets	Switzerland	45.0%
194	Sovereign Debt to Export Earnings	Emerging Markets	115.0%
195	Credit Card Delinquency Rate	USA	2.6%
196	Financial Conditions Index (FCI) - Emerging Markets	Global (EM)	+0.15 (Tight)
197	Ratio of Short-term Liabilities to Total Liabilities	China	38.2%
198	Stock Market Capitalization to GDP	USA	158.0%
199	Insurance Sector ROE (Return on Equity)	Global	11.4%
200	Global Financial Stability Risk Map Score	Global	Moderate

Objectives of the IMF Global Financial Stability Report (GFSR)

The primary objective of the Global Financial Stability Report (GFSR) is to act as the global community’s "financial radar." It serves as a semi-annual surveillance tool that monitors and identifies vulnerabilities within the international financial system to prevent major economic disruptions.

The core objectives include:

• Risk Identification: The report detects and quantifies systemic risks, such as stretched asset valuations, excessive leverage in banking and non-bank sectors, and debt sustainability issues for sovereign nations.

• Early Warning System: By using metrics like Growth-at-Risk (GaR), it provides an early warning of "tail risks"—extreme events that could lead to a severe economic contraction.

• Policy Guidance: It offers specific, evidence-based recommendations to central banks, regulators, and finance ministries on how to strengthen financial oversight and build capital buffers.

• Sector Analysis: It evaluates the resilience of critical sectors, including the banking system, insurance companies, and the rapidly growing "Shadow Banking" (NBFI) sector.

• Emerging Trend Monitoring: The GFSR tracks modern threats to stability, such as climate change risks, cybersecurity vulnerabilities, and the impact of digital assets (cryptocurrencies and stablecoins) on the traditional financial system.

---

Integration with other Flagships

The GFSR does not work in a vacuum. It draws out the financial ramifications of the economic issues highlighted in the World Economic Outlook (WEO). While the WEO focuses on growth and inflation, the GFSR focuses on the "plumbing"—the financial markets and institutions that make that growth possible.

Organizations and Entities Involved in the GFSR

The production of the Global Financial Stability Report (GFSR) is a high-level collaborative effort led by the IMF’s internal experts in close coordination with global financial regulators and private sector participants.

---

Internal IMF Leadership: The MCM Department

The Monetary and Capital Markets (MCM) Department is the primary entity responsible for the GFSR.

• Coordination: The report is prepared by IMF staff under the general direction of the IMF Financial Counsellor and the Director of the MCM Department (currently Tobias Adrian as of early 2026).

• Expertise: MCM staff are specialists in banking supervision, monetary policy, debt management, and financial market analysis. They synthesize data from across the IMF’s 190 member countries.

Key Global Partners

Because financial stability is a global "team sport," the IMF collaborates with several international organizations to ensure the GFSR reflects a unified view of systemic risk:

• Financial Stability Board (FSB): The IMF works closely with the FSB to identify "data gaps" and develop regulatory roadmaps, particularly for new frontiers like Crypto-assets and Non-Bank Financial Intermediation (NBFI).

• Bank for International Settlements (BIS): The IMF draws on data and research from the BIS (the "central bank for central banks") to understand international banking flows and liquidity.

• World Bank: While the IMF focuses on macroeconomic stability, it joins forces with the World Bank for the Financial Sector Assessment Program (FSAP), which provides deep-dive "stress tests" for individual countries that inform the GFSR.

• Standard-Setting Bodies (SSBs): The IMF interacts with bodies like the Basel Committee on Banking Supervision (BCBS) and the International Organization of Securities Commissions (IOSCO) to ensure the GFSR aligns with the latest global regulatory standards.

External Contributors and Stakeholders

The analysis in the GFSR is not just theoretical; it is "vetted" by real-world practitioners. During the drafting phase, IMF staff hold extensive discussions with:

• Private Sector: Global banks, hedge funds, asset management companies, and pension funds.

• National Authorities: Central banks (like the Fed or ECB), national treasuries, and regulatory agencies.

• Academia: Researchers providing cutting-edge econometric models for metrics like Growth-at-Risk.

---

Governance and Approval

Before the report is released to the public, it undergoes a rigorous review process:

1. Internal Review: Comments from senior staff across all IMF departments.

2. Executive Board Discussion: The report is presented to the IMF Executive Board, which consists of 24 Directors representing the member countries. Their suggestions are often incorporated into the final published version.

IMF Global Financial Stability Report (GFSR) Publication

The Global Financial Stability Report (GFSR) is a semi-annual flagship publication of the IMF. It provides a specialized assessment of the global financial system and identifies emerging risks that could lead to systemic instability.

Release Schedule

The full report is released twice a year during the IMF and World Bank Spring and Annual Meetings. For 2026, the key publication windows are:

• Spring Release (April 2026): Scheduled for release during the Spring Meetings in Washington, D.C., taking place April 13–18, 2026.

• Fall Release (October 2026): Scheduled for release during the Annual Meetings in Bangkok, Thailand, taking place October 12–18, 2026.

Publication Components

Each release typically includes the following chapters and data:

1. Chapter 1 (The Global Risk Assessment): Analyzes the current state of financial markets, asset valuations, and near-term vulnerabilities.

2. Analytical Chapters (Chapter 2 & 3): Focused deep-dives into structural shifts, such as the impact of Artificial Intelligence on markets, the growth of Private Credit, or Climate-related financial risks.

3. Statistical Appendix: A comprehensive database of the 200+ indicators (Financial Soundness Indicators) tracked by the IMF across its member countries.

---

Recent Key Findings

As of the early 2026 updates, the GFSR has highlighted a "shifting ground beneath the calm," noting that while market volatility has remained low, underlying vulnerabilities—specifically in commercial real estate (CRE) and non-bank financial intermediation (NBFI)—remain elevated due to high interest rates.

IMF Global Financial Stability Report (GFSR) FAQ

Below are the most frequently asked questions regarding the Global Financial Stability Report and its impact on the international financial landscape.

1. What is the difference between the GFSR and the World Economic Outlook (WEO)?

While both are flagship IMF reports, they focus on different "layers" of the economy:

• WEO: Focuses on the "Real Economy"—GDP growth, inflation, and trade volume.

• GFSR: Focuses on the "Financial Plumbing"—banking health, credit markets, stock market valuations, and the flow of capital.

2. What does "Growth-at-Risk" (GaR) actually mean?

GaR is a primary metric in the report that measures the downside risk to future economic growth. Instead of just forecasting an "average" growth rate (e.g., 3%), it identifies the 5% probability "worst-case scenario." If the GaR value drops significantly, the IMF is warning that financial conditions have become so tight or brittle that a severe recession is increasingly likely.

3. Why is the IMF so concerned about "Shadow Banking" (NBFIs)?

Non-Bank Financial Intermediation (NBFI)—which includes hedge funds, pension funds, and private credit—now accounts for nearly half of global financial assets. The GFSR tracks them closely because:

• They are less regulated than traditional banks.

• They often use high levels of leverage (borrowed money).

• They are deeply interconnected with traditional banks, meaning a failure in a major hedge fund could trigger a "contagion" effect across the entire system.

4. How often are these indicators updated?

The indicators are formally updated in the full reports released every April and October. However, the IMF provides "GFSR Updates" in January and July to account for sudden market shocks, such as geopolitical conflicts or unexpected shifts in central bank interest rates.

5. Can a country "fail" the GFSR assessment?

The GFSR is not a pass/fail test. However, if a country’s Financial Soundness Indicators (FSIs)—such as Non-performing Loans (NPLs) or Capital Adequacy—deteriorate significantly, it often leads to:

• A "downgrade" in market confidence.

• Higher borrowing costs for that government.

• A recommendation for an immediate Financial Sector Assessment Program (FSAP) deep-dive by IMF staff.

6. Who is the primary audience for the GFSR?

• Central Bankers: To help calibrate interest rate and macroprudential policies.

• Finance Ministers: To understand how sovereign debt levels are perceived by global markets.

• Institutional Investors: To identify "stretched valuations" in asset classes like tech stocks or commercial real estate.

---

Glossary of Key GFSR Terms

To navigate the Global Financial Stability Report, it is essential to understand the specialized terminology used by the IMF to describe market conditions, institutional health, and systemic vulnerabilities.

Term	Definition	Importance to Stability
Growth-at-Risk (GaR)	A framework that links current financial conditions to the probability of future economic downturns.	Identifies the "worst-case" GDP scenario (5th percentile) rather than just the average forecast.
Shadow Banking (NBFI)	Financial intermediation involving entities and activities outside the regular banking system (e.g., hedge funds, private credit).	These entities are often highly leveraged and less regulated, creating "hidden" systemic risks.
Capital Adequacy Ratio (CAR)	The ratio of a bank's capital to its risk-weighted assets.	Measures a bank's ability to absorb losses and stay solvent during a financial shock.
Macroprudential Policy	Regulatory policies designed to ensure the stability of the financial system as a whole, rather than individual banks.	Includes tools like countercyclical capital buffers to prevent "bubbles" from bursting.
Liquidity Mismatch	A situation where a firm's assets are long-term or "illiquid," but its liabilities (debts) are short-term.	High mismatch can lead to a "run" or a sudden collapse if creditors demand payment simultaneously.
Interest Coverage Ratio (ICR)	A debt and profitability ratio used to determine how easily a company can pay interest on its outstanding debt.	An ICR below 1.0 suggests a firm is a "zombie company," surviving only by taking on more debt.
Tail Risk	The probability of an extreme, rare event occurring (the "tails" of a distribution curve).	The GFSR focuses on these risks because they have the potential to collapse the global economy.
Sovereign-Bank Nexus	The interconnectedness between a country's government debt and the health of its domestic banking system.	A "doom loop" can occur if a government default crashes the banks, or if a bank bailout bankrupts the government.
Basis Points (bps)	A unit of measure for interest rates and other percentages in finance ($100 \text{ bps} = 1\%$).	Used to track small but significant changes in bond yields and credit spreads.
Credit-to-GDP Gap	The difference between the current credit-to-GDP ratio and its long-term trend.	A large positive gap is one of the most reliable historical indicators of a looming financial crisis.

---

Understanding the "Doom Loop"

As noted in the Sovereign-Bank Nexus definition, the IMF tracks this closely in 2026 for emerging markets. When banks hold large amounts of their own government's debt, any drop in the value of those bonds weakens the banks' capital, making them less likely to lend, which in turn slows the economy and further hurts the government's tax revenue.