The International Monetary Fund (IMF) has warned that geopolitical risks, including trade tensions, military conflicts, and terrorist attacks, could lead to significant corrections in stock prices and threaten financial stability. This warning was included in a preview of its Global Financial Stability Report. The IMF highlighted that geopolitical risk indicators, such as trade restrictions and military spending, have risen significantly since 2022. It noted that military conflicts, like the 2022 Russian invasion of Ukraine, have a disproportionately large and persistent impact on asset prices, with global stock prices dropping by an average of 1% monthly and emerging markets experiencing a 2.5% decline. Sovereign risk premiums have also risen, with increases of 30 basis points for advanced economies and 45 basis points for emerging markets. The report calls on financial institutions to incorporate geopolitical risks into stress tests, maintain sufficient capital and liquidity buffers, and adopt measures to mitigate potential losses. It also recommends that policymakers include these risks in financial supervision and regulation. The full Global Financial Stability Report is set to be released during the IMF and World Bank Spring Meetings, scheduled for April 21-26 in Washington, D.C.