Global risks top financial stability worries: CBSL survey

Friday, 9 October 2026 00:08 - - {{hitsCtrl.values.hits}}

Global macroeconomic risks have overtaken domestic concerns as the biggest perceived threat to Sri Lanka’s financial system, with their share nearly doubling in six months, even as market participants grew more confident in the system’s stability, a Central Bank of Sri Lanka (CBSL) survey showed.

Global macroeconomic risks accounted for 26% of the risks identified in the CBSL’s Systemic Risk Survey (SRS) for the second half (H2) of 2026, up from 14% in the first half (H1) and the highest share among the survey’s seven risk categories. The CBSL attributed the rise largely to heightened concerns over geopolitical tensions and potential spillovers from other countries, together with uncertainty over the global economic outlook.

Risks related to financial institutions, the top concern in H1 at 19.4%, fell to 14.1%. General domestic macroeconomic risks ranked second at 16.6%, down from 17.6%, while financial market risks eased to 14% from 15.7%.

Fiscal and sovereign-related risks declined to 12.3% from 15.4%. Risks related to financial infrastructure was the only category besides global risks to gain, rising to 12.5% from 9.3%. General risks fell to 4.6% from 8.7%.

Despite the shift in risk perceptions, confidence in the financial system increased over both the short term, defined as the next year, and the medium term, defined as the next three years. The CBSL said this reflected improved sentiment towards financial system stability.

Respondents also saw a slightly higher probability of a high-impact negative event hitting financial system stability over the short term. Over the medium term, however, the perceived probability declined slightly from the previous survey round.

The survey was conducted from 17 July to 14 August, 2026, and covered 158 institutions with a 100% response rate. Respondents were risk officers at licensed banks, finance companies, insurers, primary dealers (firms licensed to trade Government securities), unit trust management companies, margin providers and underwriters, stockbrokers, licensed microfinance companies, rating agencies, financial infrastructure providers and mobile-based e-money service providers.

The CBSL’s Macroprudential Surveillance Department has conducted the survey twice a year since H1 2017. This round was the first to run on a fully online platform. The survey assesses 46 sub-risks across seven major categories. The former domestic macroeconomic risks category has been split into fiscal and sovereign-related risks and general domestic macroeconomic risks since H2 2025.

The CBSL said the results reflect respondents’ perceptions during the survey period and do not necessarily represent the views of the Central Bank.