financial stability

Financial stability refers to the condition in which the financial system-including institutions, markets, and infrastructure-operates efficiently and effectively, ensuring smooth functioning of the economy. It encompasses the ability to withstand shocks, maintain confidence, and support sustainable economic growth by managing risks, preventing crises, and promoting resilience. Key aspects include sound banking practices, stable markets, effective regulatory frameworks, and prudent fiscal policies. Achieving financial stability contributes to economic prosperity and protects individuals, businesses, and governments from severe disruptions.