LONDON: The International Monetary Fund (IMF) has warned that Brexit poses a risk to global financial stability at a time when it is already challenged by heavily-indebted US corporations, China’s credit bubble and weak European banks. Warning that banks were likely to be the sector of the City hardest hit by Britain’s departure from the EU, the IMF said the costs of doing business would rise and regulation would become more complex. The half-yearly Global Financial Stability Report – one of the IMF’s two flagship reports – said the benefits of London as a global financial hub stemmed from economies of scale and its expertise across a range of industries. While the IMF acknowledged that there was “significant uncertainty” about the outcome of the two years of article 50 negotiations, it added that “the challenges stemming from Brexit could undermine financial stability in ways that are difficult to estimate or predict at this juncture”. The IMF also noted that financial stability benefits could arise from having a less concentrated banking system in Europe.