Will the ongoing reforms empower the IMF and make it more effective in anchoring global monetary and financial stability? The global economy and financial markets 2. A variety of risks, including political and social turmoil in parts of the world combined with natural disasters, have made the global recovery vulnerable.
One cause is capital market integration, which affects a country’s financial markets and institutions whether or not the economy is entirely integrated. We have seen that capital flows can be volatile and unpredictable. Contagion means that the problems of neighbouring or more distant economies can rapidly become one’s own. Another aspect is the much greater diversity of actors in the financial markets.