{"id":6845,"date":"2023-09-05T08:40:07","date_gmt":"2023-09-05T08:40:07","guid":{"rendered":"https:\/\/prosfunds.com\/business\/global-financial-watchdog-warns-of-further-challenges-and-shocks-ahead\/"},"modified":"2023-09-05T08:40:08","modified_gmt":"2023-09-05T08:40:08","slug":"global-financial-watchdog-warns-of-further-challenges-and-shocks-ahead","status":"publish","type":"post","link":"https:\/\/prosfunds.com\/?p=6845","title":{"rendered":"Global financial watchdog warns of \u2018further challenges and shocks\u2019 ahead"},"content":{"rendered":"<div>\n<p>Receive free Global Economy updates<\/p>\n<p class=\"article__content-sign-up-topic-description\"><span>We\u2019ll send you a <i>myFT Daily Digest<\/i> email rounding up the latest<!-- --> <!-- -->Global Economy<!-- --> news every morning.<\/span><\/p>\n<p><iframe class=\"article__content-sign-up-iframe close\" scrolling=\"no\" id=\"signUpIframe\" data-prev-url=\"\/register\/in-article-sign-up?ft-content-uuid=8f16ea1e-f926-4e23-b627-f22e58d0abbb&amp;concept-id=29e67a92-a3b8-410c-9139-15abe9b47e12\"><\/iframe><\/div>\n<div id=\"article-body\">\n<p>The world\u2019s most powerful financial watchdog has warned of \u201cfurther challenges and shocks\u201d in the months ahead, as high interest rates undermine economic recoveries and threaten key sectors including real estate.<\/p>\n<p>In his regular update to G20 leaders ahead of their summit in New Delhi this week, Klaas Knot, chair of the Basel-based Financial Stability Board, said: \u201cThe global economic recovery is losing momentum and the effects of the rise in interest rates in major economies are increasingly being felt.\u201d<\/p>\n<p>\u201cThere will certainly be further challenges and shocks facing the global financial system in the months and years to come,\u201d he added.<\/p>\n<p>Financial markets have been relatively stable in recent months, a welcome respite after a spate of crises this year that claimed midsized US lenders such as Silicon Valley Bank and Signature and brought about the demise of Europe\u2019s Credit Suisse, which was folded into its Swiss rival UBS. <\/p>\n<p>But Knot said risks in the financial system were still evident, even though contagion from the events of February and March had been limited.<\/p>\n<p>He highlighted real estate as one area authorities should \u201cclosely monitor\u201d for signs of stress given its vulnerability to rate rises, and urged \u201cfinancial providers to those sectors to manage their risks properly\u201d.<\/p>\n<p>Higher interest rates take time to fully pass through to the real economy because some borrowers are on fixed-rate loans set before central banks such as the US Federal Reserve, European Central Bank and Bank of England began tightening monetary policy to tackle soaring inflation.<\/p>\n<p>Knot said the potential for further market stresses underscored the case for \u201cfully and consistently\u201d implementing global bank capital rules agreed by regulators in 2017 and due to come into force by 2023.<\/p>\n<p>He also pointed to the need for tighter regulation of non-bank financial institutions \u2014 which span everything from private credit to hedge funds and insurers \u2014 and said it was \u201ccritical\u201d to implement agreed reforms to address risks in those markets. <\/p>\n<p>Regions have moved at different speeds on measures to regulate NBFIs, including provisions around money market funds, open-ended funds, margins, leverage and bond market liquidity. <\/p>\n<p>The US announced in July that it would not implement the bank capital regime until mid-2025, some six months later than the EU and UK, which had themselves already announced delays, to give banks more time to adjust to the new regime.<\/p>\n<p>Even though the package was widely described as the \u201cendgame\u201d for post-global financial crisis regulation, policymakers are already considering another set of refinements to address some of the vulnerabilities that were exposed this year.<\/p>\n<p>The FT reported that these measures included tightening capital and liquidity rules and forcing the US to apply globally-agreed measures to a broader range of banks.<\/p>\n<p>Knot said the FSB would soon publish a report on the \u201clessons learned\u201d from this year\u2019s banking crises and the \u201cpolicy priorities going forward\u201d. <\/p>\n<\/div>\n<p>Read the full article <a href=\"https:\/\/www.ft.com\/content\/8f16ea1e-f926-4e23-b627-f22e58d0abbb\" target=\"_blank\" rel=\"noopener\">here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Receive free Global Economy updates We\u2019ll send you a myFT Daily Digest email rounding up the latest Global Economy news every morning. The world\u2019s most powerful financial watchdog has warned of \u201cfurther challenges and shocks\u201d in the months ahead, as high interest rates undermine economic recoveries and threaten key sectors including real estate. In his [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":6846,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"content-type":"","footnotes":""},"categories":[23],"tags":[],"class_list":{"0":"post-6845","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-business"},"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v21.0 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Global financial watchdog warns of \u2018further challenges and shocks\u2019 ahead | Prosfunds<\/title>\n<meta name=\"description\" content=\"Receive free Global Economy updatesWe\u2019ll send you a myFT Daily Digest email rounding up the latest Global Economy news every morning.The world\u2019s most\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" 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