Banks should monitor systemic risks they face from asset managers, global report says

29 June 2018 7:03am
Banks should track risks posed by their financial links to investment managers, insurers and pension funds because of this large sector’s growing sensitivity to interest-rate shocks, the Bank for International Settlements said.

Bond mutual funds and exchange-traded funds are particularly vulnerable to episodes of soaring fixed-income yields that could lead to investor stampedes, the group of central banks said in its annual economic report.

Funds' deposits and credit lines with banks “represent a key direct link,” the 152-page report this week said. “There is a need for banks to monitor and manage these risks particularly carefully.”