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A global finance watchdog is demanding national regulators better scrutinize private credit, warning that banks, asset managers, insurance and private equity firms are exposed to an assortment of growing risks in the near $2 trillion sector.
In a wide-ranging study published Wednesday, the Financial Stability Board said the industry’s lack of standardized, transparent data, along with opaque valuation practices and complex funding structures and vehicles, is bringing vulnerabilities to broader markets.
It comes amid growing jitters surrounding private credit in the U.S. — spanning software exposures, business development companies, and individual corporate blow-ups.
The FSB — which is made up of central bankers, regulators and finance ministers from the G20 countries — sounded the alarm on the sector’s increasing interconnectedness with banks, insurance companies and investment managers through bank credit lines, revolving facilities and strategic partnerships.
