The Financial Stability Board (FSB) has warned that the recent surge in global stock markets and asset values could make financial markets more prone to a sharp correction, as economic and geopolitical uncertainties continue to build.
In an October 8 letter to G20 finance ministers, FSB Chair Andrew Bailey emphasized the importance of international cooperation to safeguard financial stability and support long-term economic growth.
“While most jurisdictions have seen a rebound in financial markets in recent months, valuations could now be at odds with the uncertain economic and geopolitical outlook, leaving markets susceptible to a disorderly adjustment,” the letter stated.
The warning comes on the heels of U.S. President Donald Trump’s threat to impose “massive” new tariffs on China following Beijing’s decision to tighten rare earth export rules. The move sparked Wall Street’s steepest decline in nearly half a year, highlighting market sensitivity to geopolitical developments.
Bailey also pointed to mounting government debt levels and persistent weaknesses in the financial system, noting that these factors increase the potential for instability.
“The need for global standards and cooperation therefore remains abundantly clear,” the letter said.
He added that the FSB, which includes central banks and regulators from major G20 economies, will “pivot” its strategy—shifting away from policy creation toward ensuring that agreed global reforms are fully implemented.
“The effectiveness of these measures depends on their timely, consistent and comprehensive implementation across all jurisdictions,” Bailey said.
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