In remarks on financial stability, Financial Stability Board (FSB) Chair Andrew Bailey called for better visibility of leverage and financial connections, warning that opacity can amplify shocks through uncertainty and defensive selling. Authorities should examine private credit and stablecoins before conventional size measures signal systemic danger, assessing how distress could spread or disrupt functions that are difficult to replace.
Hedge fund deleveraging amplified UK gilt yield movements during volatility following the onset of the Middle East conflict. Net hedge fund borrowing in gilt repo markets fell around 40% between December 2025 and mid-April 2026. The FSB’s existing Nonbank Data Task Force is focusing its first test case on leveraged trading strategies in sovereign bond markets to examine how better information sharing can address vulnerabilities. Bailey also urged authorities to implement the FSB’s 2025 leverage recommendations.
The private credit concerns echo the FSB’s May 2026 assessment of opaque valuations, leverage and links with banks and insurers. For stablecoins, gaps in information about reserves and redemption arrangements complicate assessments of whether rapid redemptions could force asset sales or disrupt wider markets. Effective surveillance requires timely, comparable information across sectors and borders, supported by stress analysis and closer cooperation between the FSB and the International Organization of Securities Commissions.