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The paper discusses current challenges to world financial stability in light of lessons that have been learned from past financial crises. Although there are parallels between the current situation and some of the previous crises, the current situation differs in several important respects. It comes after a decade of extremely low nominal and real interest rates along with subdued inflation and, due to fiscal and monetary policy measures deployed during the GFC and the Covid-19 pandemic, debt/GDP ratios and central banks (CBs) balance sheets are at historically high levels. The recent upsurge of inflation prompted a worldwide process of increase in policy interest rates and reduction in CB assets. An undesirable side effect of this process is that it may trigger several mechanisms that endanger world financial stability. Recent developments in Fintech and the global economic disruptions caused by the war in Ukraine create novel financial vulnerabilities that differ from previous financial crises. The rapid growth of fintech institutions poses new regulatory challenges at the national and international levels. Although no crisis has materialized to date those developments have increased the odds of a systemic global crisis. Measures designed to mitigate financial vulnerabilities are briefly discussed in the concluding section.

Current Challenges to World Financial Stability: To What Extent is the Past a Guide for the Future?