On 20 February 2023, the Financial Stability Board (FSB) published a report on the financial stability aspects of commodities markets.

The report presents an overview of a few globally traded commodities markets that are of particular economic importance at the current juncture (crude oil, natural gas, and wheat) and examines their vulnerabilities, focussing on the mechanisms through which any further stresses in these markets could propagate more broadly through the financial system.

The report also identifies a number of data gaps that hamper the assessment of vulnerabilities and transmission channels in the commodities sector. The report explains how the commodities ecosystem has adapted to the February 2022 shock and concludes with learnings and policy implications.

A number of the vulnerabilities and channels of contagion discussed in this report – including leverage, impact of margin calls on liquidity demand and market opacity – are not unique to commodities markets. Many of these issues are being addressed in the FSB’s work programme to enhance the resilience of non-bank financial intermediation.