BoE's Bailey: 'Interconnectedness' could see private credit pose risk to financial stability

Bank of England Governor Andrew Bailey, speaking as chair of the Financial Stability Board (FSB), cautioned that private credit could pose a systemic financial stability risk due to growing 'interconnectedness.' He highlighted concerns about valuation uncertainty, leverage, liquidity, and links among private credit funds, banks, and insurers. Bailey emphasized that the absence of visible stress should not be mistaken for the absence of risk, and that information gaps and growing interconnections could make private credit a financial stability risk sooner than its size might suggest.