This letter was submitted to G20 Finance Ministers and Central Bank Governors (FMCBG) ahead of their meeting on 16 April 2026.
In his letter, Andrew Bailey, notes that the conflict in the Middle East has made the global financial environment more uncertain and unpredictable. Financial markets are experiencing heightened volatility and tightening conditions. When combined with existing vulnerabilities – such as stretched asset valuations, concentrated leverage in the nonbank financial sector, liquidity mismatches, and increasing market complexity – these factors could lead to multiple shocks materialising simultaneously. The impact on financial stability will ultimately depend on the duration, scale and consequences of the conflict.
Andrew Bailey highlights three key areas that warrant heightened monitoring:
- Sovereign bond markets
- Asset valuations
- Private credit
The FSB will shortly publish a report looking at the vulnerabilities arising from private credit. The FSB is also advancing analytical work on foreign exchange derivatives and other amplification channels to better understand evolving risks.
