Source: International Monetary Fund – IMF (video statements)
Stock prices have generally had a modest reaction to geopolitical risk events, but major events—especially military conflicts—have a disproportionally larger and more persistent effect on asset prices. Geopolitical risk events can adversely affect the stability and intermediation capacity of banks and nonbank financial institutions, such as investment funds, with potential impacts on macrofinancial stability. The impact of these events can also spill over to other countries through trade and financial linkages, increasing the risk of financial contagion. The April 2025 Global Financial Stability Report assesses the impact of geopolitical risk events on prices of financial assets and discusses potential policy measures for maintaining financial
stability.