Global liquidity has become a focus of the international policy debate. Despite accommodative monetary policies and a pickup in search-for-yield behaviour, several factors seem to suggest that financial stability risks stemming from global liquidity conditions are limited. In particular, elements of credit growth, notably cross-border flows, remain muted in comparison to past liquidity surges. Meanwhile, the macroeconomic environment in the major economies is still weak and uncertain. That said, the extremely low volatility in financial markets contrasts with a widespread slowdown in global economic growth and the well known risks related to public finances and to impaired banking systems in some advanced economies. This could make global liquidity conditions vulnerable to event risks. Furthermore, stocks of credit may also be a concern. In advanced economies, these need to fall further to support a self-sustaining recovery. For several emerging market economies, including in Asia, financial stability risks stem primarily from prolonged credit and property price booms, and the prospect of a turn in the credit cycle. The current calm should thus be used to implement policies to contain these medium-term risks.