British Central Bank Governor: Global Financial System Remains Resilient Despite Shocks
Agencies2 min read
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Bank of England Governor Andrew Bailey affirmed that the global financial system maintains its resilience and robustness despite increasing uncertainty, while simultaneously emphasizing the need to avoid complacency, stating: "For this reason, we must be prepared for a world where major shocks are no longer the exception."
This came in a speech delivered by Bailey during the "Istanbul Economic Forum," organized by the Central Bank of the Republic of Türkiye at the Istanbul Financial Center, with the participation of central bank governors and high-level policymakers from around the world.
Bailey explained that the financial system has shown resilience so far, but this cannot be taken for granted in light of low growth, recurring supply shocks, and changes in market structures.
He pointed out that the war in the Middle East has created significant uncertainty regarding growth, volatility, inflation, and interest rates, noting that the fragility of current conditions in government bond markets, credit markets, and asset valuations could surface.
Bailey mentioned that the rapid expansion of AI-related financing introduces new risks, at a time when the potential contributions of AI to growth are becoming clearer.
Bailey said that despite the current uncertainty, the banking sector generally maintains a strong capital structure and does not face funding shortages.
He added: "Despite successive economic shocks and increased volatility, there has been no significant deterioration in liquidity or trading conditions in most financial markets. Financial markets have so far resisted large increases in government bond yields, and most market adjustments have occurred in an orderly manner."
He continued: "This resilience is largely due to the reforms implemented after the global financial crisis, which are sometimes criticized for being burdensome, yet their value has become clear today."
Bailey stressed the importance of avoiding complacency, saying: "In a world where economic policies are increasingly becoming an arena for geopolitical competition, we may see more disruptions. Therefore, we must be prepared for a world where major shocks are no longer just an exception."
