There is a global financial cycle that affects capital flows, asset prices, and credit growth worldwide. This cycle is linked to market uncertainty and risk aversion. Countries with more credit inflows are more influenced by this global cycle. The cycle is not tied to specific economic conditions in each country. Large asset price bubbles and excessive credit creation can lead to financial crises. The global financial cycle is influenced by monetary policy in a central country, affecting global banks, capital flows, and credit growth internationally. National monetary policies are limited by the global financial cycle when capital is freely moving.