| How Rising Geopolitical Risks Weigh on Asset Prices
April 14, 2025--Heightened tensions can hurt stock markets, raise government borrowing costs, and pose risks to financial stability |
| Shocks such as wars, diplomatic tensions, or terrorism can disrupt cross-border trade and investment. This can hurt asset prices, affect financial institutions, and curtail lending to the private sector, weighing on economic activity and posing a threat to financial stability.
Such risks are challenging for investors to price due to their unique nature, rare occurrence, and uncertain duration and scope. This can lead to sharp market reactions when geopolitical shocks materialize. |