The world's most powerful financial watchdog has warned of “new challenges and shocks” in the coming months, as high interest rates undermine economic recoveries and threaten key sectors, including real estate. In his regular update to G20 leaders ahead of their summit in New Delhi this week, Klaas Knot, chairman of the Basel-based Financial Stability Board, said: “The global economic recovery is losing momentum and the effects of rising interest rates in major economies are increasingly felt.” "There will undoubtedly be more challenges and shocks facing the global financial system in the months and years to come," he added. Financial markets have remained relatively stable in recent months, a welcome respite after a series of crises this year that hit midsize U.S. lenders such as Silicon Valley Bank and Signature and led to the demise of Europe's Credit Suisse, which merged with its Swiss rival UBS.
The financial system were still evident, even though contagion from the events of February and March had been limited. He highlighted the real estate sector as an area that authorities should “closely monitor” for signs of stress Jordan Mobile Number List given its vulnerability to rate increases, and urged “financial providers in those sectors to manage their risks appropriately.” Higher interest rates take time to fully translate into the real economy because some borrowers have fixed-rate loans established before central banks such as the U.S. Federal Reserve, the European Central Bank and the Bank of England began tightening policy. monetary policy to address rising inflation. Knot said the potential for further market tensions underscores the need to “fully and consistently” implement global bank capital rules agreed by regulators in 2017 and set to come into force in.
He also flagged the need for tighter regulation of non-bank financial institutions - ranging from private credit to hedge funds and insurers - and said it was "critical" to implement agreed reforms to address risks in those markets. Regions have moved at different speeds on measures to regulate NBFIs, including provisions on money market funds, open-end funds, margins, leverage and bond market liquidity. The United States announced in July that it would not implement the bank capital regime until mid-2025, about six months later than the EU and the United Kingdom, which had already announced delays, to give banks more time to adapt to the new regime. Although the package was widely described as the “end” of post-global financial crisis regulation, policymakers are already considering another set of improvements to address some of the vulnerabilities that were exposed this year.