Tobias Adrian, Director of the Monetary and Capital Markets Department, IMF

The IMF’s Global Financial Stability Report is a twice yearly, must read. Leading the excellent research done here is Tobias Adrian, Financial Counsellor and Director of the Monetary and Capital Markets Department at the IMF. It was a pleasure to welcome Tobias to the podcast to explore the IMF’s financial stability framework, vulnerabilities in global markets, and the evolving risks shaping the financial system. We begin with Tobias’ role and the evolution of the GFSR, which combines market intelligence, analytical research, and a framework for assessing financial vulnerabilities. He explains how the report has shifted alongside the macro backdrop, from an environment defined by low inflation and negative-yielding debt to one characterized by higher inflation, tighter financial conditions, and geopolitical uncertainty. A central theme throughout the conversation is the distinction between forecasting shocks and identifying vulnerabilities. Tobias describes how the IMF focuses on leverage, maturity transformation, valuation, currency mismatches, and interconnectedness rather than attempting to predict the next catalyst. The discussion explores how these vulnerabilities can amplify the effects of unexpected shocks across financial markets. We then turn to several themes from the most recent GFSR. Tobias discusses artificial intelligence as both a driver of investment and productivity while examining the financial linkages, capital spending, and interconnectedness developing across the AI ecosystem. He also outlines the IMF’s assessment of sovereign debt, rising term premiums, and the growing role of non-bank financial institutions in financing global markets. The latter part of the discussion focuses on market plumbing, including leverage in hedge funds, Treasury basis trades, derivatives markets, and the challenges of monitoring system-wide positioning. Tobias explains how liquidity, options markets, and quantitative strategies can contribute to vulnerabilities that become apparent during periods of market stress. I hope you enjoy this episode of the Alpha Exchange, my conversation with Tobias Adrian.