Uncertainty and Fragility Go Hand in Hand

Uncertainty and fragility go hand in hand. One feeds the other in a feedback loop that can quietly weaken even the most sophisticated systems — until the next shock makes their vulnerability undeniable. Nowhere is this relationship more visible than in global financial markets. Since the 2008 Global Financial Crisis (GFC), major regulatory reforms have strengthened some areas of finance, but in many ways, the global system has become more brittle. Today’s financial architecture is exposed to new forms of uncertainty, and thus to new forms of fragility — less obvious, but far more dangerous.

Stronger Core, Shifting Fragility?

In the wake of 2008, policymakers worldwide focused on preventing a repeat of that crisis. They strengthened bank capital requirements, mandated regular stress testing, and cracked down on risky lending practices. These reforms made traditional banks — once at the center of systemic failure — more resilient i.e., still reactive. As a result, on the surface, the global financial system looks more stable, but when fragility shifts it also increases.