Federal Reserve flags U.S. debt as top risk to financial stability, overtaking inflation concerns.

The Federal Reserve's latest report identifies U.S. fiscal debt sustainability as the top risk to financial stability, surpassing concerns over inflation. Other major risks include potential U.S. recession, Middle East tensions, and global trade issues. While banks are considered resilient, there are concerns about elevated asset values, liquidity in Treasury markets, and high leverage among hedge funds. The report also notes rising stablecoin assets, which could face rapid scaling and run risks, due to a lack of comprehensive federal regulation.

November 22, 2024
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