BoE flags challenges of evaluating private credit risks to financial stability

Masked financial vulnerabilities

The Bank of England’s director of financial stability Lee Foulger has warned of challenges in assessing the financial stability risks posed by private credit vulnerabilities in a higher rates environment.

During a speech today (29 January), Foulger said that assessing the extent of the risks, or in which scenarios they might crystallise, is "easier said than done" given "significant challenges" with the procurement of reliable data to monitor risks in the sector. According to Foulger, the shift in the risk environment, including greater geopolitical risks, more subdued economic growth and tighter financing conditions, will pose specific challenges to private credit markets.  This is both in terms of the way risks are managed and because the underlying borrowers and specific business mo...