Washington — The global economic recovery has strengthened financial stability, but easy monetary and financial conditions against a backdrop of sluggish inflation is elevating medium-term risks, the International Monetary Fund (IMF) said on Wednesday. The IMF, whose northern-hemisphere autumn meetings with the World Bank get under way in Washington later this week, also noted risks are rotating from banks, which have fortified their balance sheets, to financial markets as credit spreads compress, volatility declines and asset prices rise. "While increased risk appetite and search for yield are a welcome and intended consequence of unconventional monetary policy measures ... there are risks if these trends extend too far," the IMF said in its biannual global financial stability update. A prolonged search for yield has raised the sensitivity of the financial system to market and liquidity risks, the IMF said, keeping those risks elevated. The IMF urged national regulators to carefull...

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