2022 UK bond market meltdown highlights potential for global financial crisis due to forced asset sales by non-banks.
The multitrillion-dollar threat of lines of credit provided by banks could spark another financial crisis, as non-banks with similar operations to banks face forced asset sales during economic shocks. This would lead to dumping Treasury bonds, corporate bonds, and real estate to generate liquidity, impacting non-banks and banks' balance sheets. The UK bond market meltdown in 2022 due to tax cuts and energy price caps exemplifies this potential crisis scenario.
June 24, 2024
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