The European Central Bank (ECB) has identified private credit as a growing risk to financial stability, alongside elevated asset valuations and expansionary fiscal policies in certain jurisdictions, according to a report by Bloomberg.
The report cites Vice-President Luis de Guindos ahead of the ECB’s forthcoming Financial Stability Review in late May, as highlighting the increasing relevance of non-bank lending channels – particularly private credit – as part of a broader set of vulnerabilities being monitored by policymakers.
The comments come as private credit markets continue to expand across Europe and the US, with institutional investors and alternative asset managers increasing allocations to direct lending and other private debt strategies. Regulators have been paying closer attention to the sector’s rapid growth and its interconnectedness with traditional banking and capital markets.
The ECB’s upcoming review is expected to provide a more detailed assessment of systemic risks across financial markets, including the role of private market financing in an environment of persistent macroeconomic uncertainty and elevated valuations.
