INSUBCONTINENT EXCLUSIVE:
The US Federal Reserve on Friday flagged high levels of corporate debt, the impact of an extended period of low global interest rates, and
pointing in particular to commercial real estate values
low among the largest banks, and the use of potentially volatile short-term funding posing only a modest risk to financial institutions.
But
business slows and worsen any economic downturn
In addition, the Fed said low global borrowing costs could over time erode bank, insurance company, and pension fund returns, prompting them
basket of assets.
The Fed devoted a section of the report to the idea, warning that while that and other innovative, technology-driven
introduces important challenges and risks related to financial stability, monetary policy, safeguards against money laundering and terrorist
to help establish a global stablecoin, the Fed said it raised a host of regulatory, anti-money laundering, and consumer protection
challenges that must be addressed before any product launch.
The financial stability report was inaugurated a year ago, part of a growing
effort by the central ban to better understand the risks posed by financial markets to the broader economy
The last two US recessions emanated from the financial sector - the collapse of the dot-com stock bubble at the start of the century, and
the meltdown of the subprime housing market ahead of the 2007 to 2009 slowdown - and policymakers see the report as a way to identify
problems before they become acute.
The last few months have been volatile ones for stock and bond markets, with tensions heightened due to
the US -China trade war, a slowing global economy, and a list of geopolitical risks.
Central banks globally have cut interest rates as a
result, with three Fed rate cuts in particular easing tensions in bond markets and recently boosting activity in housing and other
debt is part of that, and a risk that Fed Chair Jerome Powell has repeatedly cited since taking over as head of the central bank.
Business
credit has continued to grow faster than the economy, the Fed noted, debt is high relative to both the size of the US economy and the size
with interest rates low by historical standards, debt service costs are at the lower ends of their historical ranges, particularly for risky