Financial stability refers to a state in which an economy is able to maintain stable and sustainable economic growth, with low levels of inflation and unemployment. It means that there are no sudden disruptions or shocks that can cause major financial crises or instability. Financially stable economies have strong banking systems, healthy government finances, and robust capital markets. This stability allows businesses to make long-term investments with confidence, knowing that the economic environment is predictable and stable. In essence, financial stability refers to a state of equilibrium in which all sectors of an economy are functioning smoothly without any major disruptions or disturbances.