Federal Reserve Releases Latest Financial Stability Report – Financial Services

To print this article, all you need to do is be registered or log in to Mondaq.com.

Late last week, the Federal Reserve Board (“FRB”) released its semi-annual Financial Stability Report.

In a statement released with the report, FRB Vice Chair Lael Brainard said that over the past six months, “household and corporate debt has remained generally stable and, overall, Households and businesses have maintained their ability to cover debt service, despite rising interest rates.” .” She also noted that ”

The report notes that the FRB’s monitoring framework “distinguishes between shocks and financial system vulnerabilities” and “focuses primarily on assessing vulnerabilities, emphasizing four broad categories and how these categories could interact to amplify stresses in the financial system”. system.” The four categories of vulnerabilities are (1) valuation pressures, (2) corporate and household borrowing, (3) leverage within the financial sector, and (4) funding risks. report preview notes that since the release of the May report, “the economic outlook has weakened and uncertainty about the outlook has remained elevated, noting that”[i]Inflation remains unacceptably high in the United States and is high in many other countries as well.”

Regarding vulnerability to funding risk (and perhaps showing some foreknowledge to our lead article on FTX this week), the report noted that stablecoins remained vulnerable to runs. The report included a discussion of digital assets and financial stability, noting the problems and volatility in the crypto market in the spring of this year. This discussion noted that the ”

The report identified several near-term risks that “could be amplified” by the four financial vulnerabilities, including high inflation, geopolitical risks (noting Russia’s invasion of Ukraine), market fragilities and possible shocks caused by a cyber event.

The content of this article is intended to provide a general guide on the subject. Specialist advice should be sought regarding your particular situation.

POPULAR ARTICLES ON: Finance and Banking of the United States

Beneficial Ownership Information: A Final Rule

Morrison & Foerster LLP

On September 29, 2022, the Financial Crimes Enforcement Network (FinCEN) released a final rule implementing beneficial ownership requirements for certain U.S. and foreign…

FINRA Facts and Trends: October 2022

bracewell

Welcome to the latest issue of Bracewell’s FINRA Facts and Trends, a monthly newsletter devoted to condensing and digesting recent FINRA developments in the areas of application…

Comparative guide to secured loans

Collas Crill

Comparative guide to secured loans for the British Virgin Islands jurisdiction, see our comparative guides section to compare multiple countries

.

Add Comment