What is the meaning of financial stability?

Financial stability is a situation in which different mechanisms of the economy for managing financial risks, allocation, pricing etc are functioning in a stable way such that it can contribute to the economic growth.You can read about the Financial Stability and Development Council (FSDC) – UPSC Notes in the given link.

Financial stability will give the financial institution systems and key financial markets the ability to resist economic shocks.

Further readings:

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

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