Financial Stability Board says stability outlook more challenging amid banking turmoil

Ongoing surveillance has highlighted vulnerabilities associated with elevated debt levels, business models based on low interest rates, says international body

By Ovunc Kutlu

ISTANBUL (AA) - The Financial Stability Board (FSB) said in a letter to G20 finance ministers and central bank governors published Wednesday that the financial stability outlook has become more challenging in recent weeks as a result of turmoil in the banking sector.

The international body, which monitors and makes recommendations about the global financial system, said "ongoing surveillance has highlighted vulnerabilities associated with elevated debt levels, business models based on the presumption of low and stable interest rates, stretched asset valuations, and the combination of leverage and liquidity mismatches in non-bank financial intermediation."

"While the financial reforms put in place following the 2008 Global Financial Crisis have assisted in making the banking sector as a whole better able to absorb adverse shocks, recent events provide important lessons for financial authorities, including for bank prudential and resolution frameworks," it said in the letter, which it submitted ahead of a G20 meeting this week.

It said FSB members remain vigilant and stand ready to take policy measures to maintain the resilience of the global financial system.

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