The October 2017 GlobalFinancial Stability Report (GFSR) finds that the global financial systemcontinues to strengthen in response to extraordinary policy support, regulatoryenhancements, and the cyclical upturn in growth. Global bank balance sheets arestronger because of improved capital and liquidity buffers, amid tighterregulation and heightened market scrutiny. However, some banks are stillgrappling with legacy issues and business model challenges, where progress hasbeen uneven. The environment of continuing monetary accommodation—necessary tosupport activity and boost inflation—may lead to a continued search for yieldwhere there is too much money chasing too few yielding assets, pushing investorsbeyond their traditional habitats. As the search for yield intensifies, vulnerabilitiesare shifting to the nonbank sector and market risks are rising. This may leadto a further compression of risk compensation in markets and higher leverage inthe nonfinancial sector. These challenges must be managed carefully to avoidputting growth at risk. Policymakers at both the national and global level willhave to strengthen the financial and macroeconomic policy mix. The October 2017GFSR also includes a chapter that examines the short- and medium-termimplications for economic growth and financial stability of the past decades’rise in household debt. It documents large differences in household debt-to-GDPratios across countries but a common increasing trajectory that was moderatedbut not reversed by the global financial crisis. Another chapter develops a newmacroeconomic measure of financial stability by linking financial conditions tothe probability distribution of future GDP growth and applies it to a set of 20major advanced and emerging market economies. The chapter shows that changes infinancial conditions shift the whole distribution of future GDP growth.