The world’s top financial watchdog warned that a sharp run-up in global asset prices has left markets vulnerable to the potential for a crash given current economic and geopolitical uncertainties, Reuters reported.
In a letter to G20 finance ministers dated Oct. 8 and released ahead of meetings in Washington this week, Financial Stability Board (FSB) Chair Andrew Bailey said “valuations could now be at odds with the uncertain economic and geopolitical outlook, leaving markets susceptible to a disorderly adjustment.”
Bailey stressed that elevated risks make multilateral cooperation essential not only to avert crises but to sustain growth, the news outlet said. He also flagged rising sovereign debt burdens and said vulnerabilities across the financial system “remain high.”
The caution came days before Wall Street suffered its steepest decline in nearly six months after U.S. President Donald Trump threatened “massive” new tariffs on China in response to Beijing’s tightening of rare earth restrictions.
Against this backdrop, the FSB, which brings together central banks and regulators from the Group of 20 economies, will shift its emphasis from crafting new policies to monitoring and facilitating the rollout of already agreed global financial reforms, according to the letter cited by Reuters.
“The effectiveness of these measures depends on their timely, consistent and comprehensive implementation across all jurisdictions,” Bailey wrote. “The need for global standards and cooperation therefore remains abundantly clear.”
Read more at Reuters