Economic recovery has reinforced financial stability around the globe, but easy monetary and financial conditions alongside the conditions of slow inflation is bringing forth risks, according to the International Monetary Fund.

The IMF, who will meet with the World Bank in Washington later this week, also stated that jeopardies are revolving from the banks. The banks have defended their balance sheets to financial markets as credit spreads shrink, instability declines, and asset prices increase.

“While increased risk appetite and search for yield are a welcome and intended consequence of unconventional monetary policy measures…there are risks if these trends extend too far,” reported by the IMF in the biannual global financial stability update.

The IMF advised national regulators to carefully consider proposals that would significantly ease capital or liquidity in “light of their potential to damage the agenda of global regulatory harmonization.”

The improvement in near-term financial stability is being reinforced by the broad global economic improvement. Tuesday, the IMF upgraded its global economic growth forecast for 2017 to 3.6 percent, and to 3.7 percent for 2018, propelled by the increase in trade, investment, and consumer confidence.

The central banks globally are in different stages of eliminating monetary policy accommodation, which has been difficult due to general sluggish inflation. The U.S. Federal Reserve has increased the frequency of interest rate increases since late 2015. The European Central Bank and Bank of Japan have not moved away from negative rates and bond buying.

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“Too quick an adjustment in monetary policies could cause unwanted turbulence in financial markets and set back progress toward inflation targets,” the IMF reported.

The Fund cautioned that leverage in the non-financial sector was higher than prior to the financial crisis across the G20 advanced economies as a whole. Such leverage increases vulnerability for households and companies to changes in interest rates and can bring on weaker economic activity.

“The key challenge confronting policymakers is to ensure that the buildup of financial vulnerabilities is contained while monetary policy remains supportive of the global recovery,” the IMF advised. “Otherwise, rising debt loads and overstretched asset valuations could undermine market confidence in the future, with repercussions that could put global growth at risk.”