FSB Plenary highlights potential new vulnerabilities to financial stability

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Ref: 8/2026

The Financial Stability Board (FSB) Plenary met on 1 June 2026 in London, United Kingdom. Members discussed vulnerabilities in the global financial system; sound practices for artificial intelligence (AI) adoption by financial institutions; regulatory and supervisory modernisation initiatives; implementation monitoring; and data challenges related to nonbank financial intermediation (NBFI).

Financial system vulnerabilities

Members discussed the most prominent vulnerabilities in the global financial system, and how the global economic outlook has evolved since their previous meeting in November 2025. Members expressed particular concern that a combination of shocks could concurrently trigger multiple vulnerabilities, threatening financial stability. Key vulnerabilities remain elevated, although the financial system remains resilient. Asset valuations are still high and risk premiums compressed. Sovereign debt continues to be elevated in a context of high public deficits and shortening debt maturities, leaving government bond markets vulnerable to shocks and changes in investor risk appetite, especially given the increased use of leveraged trading strategies in these markets. Private credit usage has grown rapidly, and parts of the sector remain untested in a prolonged economic downturn. In addition, operational outages at critical nodes in the financial system could lead to disruptions. Members also expressed specific concerns about the impact of these global conditions on emerging market economies.

The Plenary highlighted two new developments that have further complicated the risk landscape. First, the conflict in the Middle East has led to ongoing concern about energy and commodity markets and the potential impact on countries dependent on commodity imports. Inflation has gone up, and bond yields have increased. While financial markets have continued to function well so far, uncertainty and volatility are heightened. Second, the unveiling of powerful frontier AI models has concerned regulators and market participants. Such models may sharply increase cyber risks, and patching efforts are important, but may add to problems if rushed or poorly executed.

Sound practices for adoption of artificial intelligence by financial institutions

The Plenary welcomed the timely report on sound practices for financial institutions’ responsible AI adoption developed at the request of the US G20 Presidency. The FSB will publish the report for consultation in the coming weeks, with the final report to be delivered to the G20 Finance Ministers and Central Bank Governors in October.

Regulatory and supervisory modernisation

Many FSB members are reviewing their regulatory and supervisory policies, including supervisory practices, to assess whether they are well suited for changes in the financial system, to facilitate economic growth, and to remain forward looking and adaptive to current and future material risks, without compromising resilience. In this context, the Plenary reviewed the findings from a stocktake of members’ ongoing modernisation initiatives. The stocktake found that modernisation efforts are widespread across jurisdictions and authorities, covering both regulation and supervision. Frequently, they represent an ongoing or iterative practice aimed at ensuring effectiveness. Members agreed to continue work in this area, consistent with the view that financial stability is necessary for robust economic growth.

Implementation monitoring

The FSB Plenary discussed how the FSB’s processes for developing recommendations could better support positive implementation outcomes. The FSB’s Implementation Monitoring Review will make recommendations for improving these processes later this year. Members reiterated the importance of timely and consistent implementation and their commitment in this regard.

NBFI data challenges

Members discussed the importance of progressing efforts to monitor risks involving leveraged strategies in sovereign bond markets. The FSB Plenary received an update from the FSB Nonbank Data Task Force on related data challenges. The discussion focused on risk identification and monitoring frameworks, public disclosure, and cooperation between authorities, including those in offshore financial centres. The Plenary also discussed how best to engage with stakeholders on these issues.

Conclusion

“There is growing concern over new vulnerabilities to global financial stability,” commented Governor Andrew Bailey, Chair of the FSB. “Heightened uncertainty and rapid transformation within the financial system and beyond underscore the need for robust vigilance and sustained international cooperation to address shared challenges.”

Notes to editors

The FSB coordinates at the international level the work of national financial authorities and international standard-setting bodies and develops and promotes the implementation of effective regulatory, supervisory, and other financial sector policies in the interest of financial stability. It brings together national authorities responsible for financial stability in 24 countries and jurisdictions, international financial institutions, sector-specific international groupings of regulators and supervisors, and committees of central bank experts. The FSB also conducts outreach with approximately 70 other jurisdictions through its six Regional Consultative Groups.

The FSB is chaired by Andrew Bailey, Governor of the Bank of England. The FSB Secretariat is located in Basel, Switzerland and hosted by the Bank for International Settlements.