News Digest: IMF seeks closer monitoring of private credit markets

April 12, 2024

News Digest:

The International Monetary Fund (IMF) has sought closer monitoring of the $2 trillion private credit market. It also sounded a word of caution that the rapid growth and interconnected nature of this financial instrument could heighten vulnerabilities if oversight is inadequate.

In its Global Financial Stability Report for 2024, the IMF said immediate risks may be contained but the (private credit) sector has vulnerabilities, is somewhat opaque, and is growing rapidly under limited prudential oversight.

The report suggested a more active supervisory and regulatory approach to private credit that focuses on monitoring and risk management. Authorities should enhance cooperation across industries and national borders to address data gaps and make risk assessments consistent.

It also called upon regulators to improve reporting standards and data collection with a specific focus on liquidity and conduct risk in private credit funds. Regulators should implement recommendations on product design and liquidity management from the Financial Stability Board and the International Organization of Securities Commissions, it said.

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