IMF warns $2trn 'opaque' private credit sector could amplify financial vulnerabilities

Concerns over semi-liquid fund growth

Valeria Martinez
clock • 2 min read

The International Monetary Fund has warned that the $2trn private credit sector could heighten financial vulnerabilities due to its opaque nature, while flagging risks over the growth of funds aimed at the retail market.

In remarks that echo similar warnings from the Bank of England, the IMF said in a report on Monday (8 April) that if fast growth continues with limited oversight, existing vulnerabilities could become a systemic risk for the broader financial system. Valuation is infrequent and assessing credit quality is often challenging, the agency noted, adding that grasping potential systemic risks is difficult due to the complex interconnections between private credit funds, private equity firms, commercial banks, and investors. Bank of England warns of private credit vulnerability in higher rat...

To continue reading this article...

Join Investment Week for free

  • Unlimited access to real-time news, analysis and opinion from the investment industry, including the Sustainable Hub covering fund news from the ESG space
  • Get ahead of regulatory and technological changes affecting fund management
  • Important and breaking news stories selected by the editors delivered straight to your inbox each day
  • Weekly members-only newsletter with exclusive opinion pieces from leading industry experts
  • Be the first to hear about our extensive events schedule and awards programmes

Join now

 

Already an Investment Week
member?

Login

More on Regulation

FCA approves Legal & General's first private markets LTAF

FCA approves Legal & General's first private markets LTAF

DC-focused strategy to launch this summer

Valeria Martinez
clock 22 May 2024 • 1 min read
Citigroup Global Markets fined by FCA and PRA over $1.4bn trading error

Citigroup Global Markets fined by FCA and PRA over $1.4bn trading error

Combined fine of £61.6m

Valeria Martinez
clock 22 May 2024 • 2 min read
'Finfluencers' face FCA legal action over trading scheme

'Finfluencers' face FCA legal action over trading scheme

Social media scam

Sahar Nazir
clock 16 May 2024 • 1 min read
Trustpilot