Global financial watchdog issues stark warning over further shocks - reports
'There will certainly be further challenges and shocks facing the global financial system in the months and years to come.'
According to a report by the FT, Klaas Knot, chair of the FSB, told G20 leaders the global economic recovery is «losing momentum», and the effects of the rise in interest rates in major economies are «increasingly being felt».
«There will certainly be further challenges and shocks facing the global financial system in the months and years to come,» he said.
Knot also pointed to the property sector as a potential lurking problem, and one authorities should «closely monitor» for risks.
Financial providers to the real estate sector, which is particularly vulnerable to increases to the cost of borrowing through higher interest rates, must «manage their risks properly», he said.
Global regulatory bodies recommend open-ended fund managers charge exit fees
Fixed rate loans and mortgages meant the recent increases in interest rates by the US Federal Reserve, European Central Bank and Bank of England will often not hit borrowers straight away. This slow release will only impact each country's real economy after a period of time.
The FSB chair said current risks in the global financial system highlighted the urgency to put in place worldwide rules for bank capital, which are due to be implemented this year. He also said that tighter regulation of non-bank financial institutions (NBFIs), such as private credit, hedge funds and insurers, is also needed.
It is «critical» to put in place agreed reforms to address risks in those markets, Knot added, including provisions around money market funds, open-ended funds, margins, leverage and bond market liquidity.
Delays to countries adopting the rules include the US,
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