The Financial Stability Board (FSB) Plenary met in Basel today to discuss risks and vulnerabilities from market developments in the global financial system and progress against its 2018 workplan for delivery to the Argentine G20 Summit in November.
Market developments and vulnerabilities
The Plenary discussed, as part of its regular risk assessment, market developments and vulnerabilities in the global financial system. The Plenary continues to see a broad-based snap-back in long-term interest rates as a risk. After a decade of very low interest rates, financial institutions and markets in advanced and emerging market economies may not be sufficiently prepared for potential adverse economic and financial risks from market developments. A tightening of financial conditions could stem from surprises in economic growth, inflation, expectations of monetary and fiscal policies, or geopolitical events.
The Plenary specifically explored the possible consequences such a snap-back could have, focusing on the following areas:
High sovereign, corporate and household debt levels in many parts of the world could expose the financial system to market losses, rising credit defaults and…
