Free GARP FRM Part II Current Issues in Financial Markets Practice Questions
Current Issues in Financial Markets carries 10% of GARP FRM Part II and is rebuilt every year from recent industry, central bank, and regulator papers (GARP). The 2026 readings cover artificial intelligence in capital markets and its financial stability implications, the rise and drivers of private credit, unbacked crypto assets and tokenization, monetary and fiscal policy after the inflation surge, and the latest IMF financial stability assessment. Questions test the arguments and their risk implications rather than calculations.
124 questions28 easy63 medium33 hard2026 syllabus
Sample Questions
Question 1
Easy
Which factor does the BIS identify as a key driver of the rapid global growth of private credit?
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Correct Answer: A
Solution
A is correct. The BIS attributes private credit's growth to the migration of lending from regulated banks, which face higher capital requirements, toward funds, combined with strong institutional demand for the yield and diversification private credit offers. Borrowers also value the speed and certainty of execution from a single lender.
Question 2
Medium
Why does a high level of public debt create tension between fiscal and monetary policy, according to the BIS?
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Correct Answer: A
Solution
A is correct. With high public debt, monetary tightening raises debt-service costs and can strain public finances, creating pressure on the central bank to keep policy loose, a risk of fiscal dominance. This is the central tension: the stance needed for price stability may conflict with debt sustainability.
Question 3
Hard
Which combination of policy stances is MOST likely to lie outside the region of stability over a sustained horizon?
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Correct Answer: B
Solution
B is correct. A sustained combination of large primary deficits and accommodative monetary policy while inflation exceeds target tests all three boundaries at once (price stability, debt sustainability, and ultimately financial stability) and lies outside the region. The other mixes are consistent with the joint stability the region describes.
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