U.S. monetary policy uncertainty and systemic financial risk

U.S. monetary policy exerts pronounced international spillovers and constitutes a key source of disturbances to global financial stability. Based on quarterly data for 50 economies over 2002–2023, we employ a fixed-effects panel model to examine the link between U.S. monetary policy uncertainty and systemic financial risk. We find that increases in U.S. monetary policy uncertainty materially raise systemic financial risk across economies. Asset price movements and volatility in cross-border capital flows emerge as potential channels underlying this relationship. Further analysis shows that financial openness amplifies these spillovers, whereas higher levels of economic development and stronger institutional quality help mitigate the rise in systemic financial risk induced by external monetary policy uncertainty. These findings suggest that, to safeguard macroeconomic and financial stability, economies should tailor financial opening strategies to domestic conditions, prudently manage liberalization, and promote high-quality development with institutional improvements, thereby enhancing resilience to external uncertainty shocks.