The main risk to local financial stability comes from an abrupt tightening of financing conditions, which could be a consequence of an intensification of the conflict in the Middle East or its effects on inflation and global growth. International financial conditions deteriorated during March but have returned to levels that are consistent with a benign view of the economy, contrasting with the risks associated with the conflict and other sources of uncertainty. Global vulnerabilities, associated with high fiscal indebtedness, high valuations of risky assets, and greater interconnection between banks and other financial agents remain high, which can exacerbate and spread the consequences of various risk events. Local financial markets have shown movements in line with global trends, although recent changes in the participation of non-residents and in the portfolios of local institutional investors could increase the transmission of external volatility events to our economy. The financial situation of households and firms does not show significant changes, while stress test results suggest that the materialization of a severe shock would have limited impact on their debt repayment capacity. Meanwhile, the levels of profitability, capital and liquidity of the banks would allow them to remain solvent in a scenario of severe stress. The Chilean economy has macroeconomic soundness and robust financial regulation and supervision standards, which allow it to have adjustment mechanisms and buffers to mitigate the effects of severe shocks.