The Bank of England warned Wednesday that global financial markets risks were on the increase, owing to rising debt levels in China and political uncertainty in Europe.
- A tightening U.S. dollar funding conditions are increasing risks in some emerging markets
- Trade tensions between the U.S. and China, as well as rising corporate debt levels in both of the world’s biggest economies, are global vulnerabilities that are “material and have increased”.
- “Political uncertainty led to sharp falls in Italian asset prices in late May. Asset prices have since partly recovered but the episode suggests rising risks in the euro area and underlines the vulnerabilities created by high public debt levels and interlinkages between banks and sovereigns in a currency union.”