Market turbulence could ‘coincide’ with private credit crunch, said Andrew Bailey
The global economy faces a potential “double whammy”, whereby market volatility could exacerbate the growing crisis in private credit, according to the head of the world’s financial stability watchdog.
“We’ve got volatile markets… what if that, in a sense, coincides with one of these other things, let’s say, private credit becoming a much bigger problem?”, Andrew Bailey, chair of the International Financial Stability Board (FSB), told the European Parliament’s Committee on Economic and Monetary Affairs in Brussels on Thursday.
“From a financial stability point of view, we have to be very focused on that,” added Bailey, who also serves as governor of the Bank of England. “And I say this ‘double whammy’ point because I think it’s always easy to think about these risks in a very sort of compartmentalised fashion…. We have to think what would happen if they came together.”
The remarks come amid tumultuous ructions in global markets over the past year, as US President Donald Trump’s erratic tariff policy, attacks on US Federal Reserve independence, and the war on Iran spook investors and induce huge fluctuations in bond and equity markets.
