What is the importance of financial stability?

Financial Stability will help in maintaining the levels of employment, managing financial risks, will help in efficient allocation of resources. It will help in prevention of disruption of the financial system. You can read about the Financial Stability and Development Council (FSDC) – UPSC Notes in the given link.

Financial instability will lead to an economic crisis. Financial stability is important for healthy growth of the economy.

Further readings:

1. Global Financial Stability Report 2020 – GFSR Report By IMF
2. Financial Stability Report (FSR) 2020 – An Overview of Biannual RBI Report