The global financial authority will increase supervision of private credit and stablecoins in response to mounting systemic vulnerabilities identified across markets. The private credit market, valued at around $1.7 trillion, together with the rise of stablecoins, has prompted investigations and regulatory recommendations in several jurisdictions.
The private credit market has grown rapidly and now represents a significant source of financing outside the traditional banking system. It involves direct financing to companies by non-bank funds, typically encompassing syndicated debt, direct loans and hybrid structures that can complicate risk assessment and transparency.
A U.S. government review, driven by Congress and carried out by the U.S. Government Accountability Office (GAO), is examining how the sector’s expansion can amplify the transmission of risks to the real economy, with a draft of the report expected this spring. Moody’s Ratings warns about practices that conceal effective leverage, the rise of payment-in-kind (PIK) debt —which increases refinancing risk— and the erosion of contractual covenants, factors that reduce buffers for investors in stress scenarios.
In Australia, the regulator (ASIC) has opened investigations into private credit managers, focused on loan valuation and governance, prompted by the entry of high-net-worth and retail investors into previously reserved markets. This expansion to the general public increases the need for disclosure standards and supervision to prevent concentrated losses and contagion risks outside the banking regulatory perimeter.
Stablecoins and macroprudential risks
The Financial Stability Board (FSB) and the European Systemic Risk Board (ESRB) have flagged the threat of multilocal issuance models —referred to as “third country multi‑issuer”— where reserves and issuance are separated across jurisdictions, creating liquidity mismatches and exposure to liabilities abroad. The ESRB recommended measures that include bans on those models and strict equivalence frameworks to safeguard local reserves (statement of Oct. 2).
The Financial Policy Committee of the Bank of England warned about inadequate reserve management that could trigger forced sales and market distortions, and criticized private issuance of stablecoins by banks, preferring the regulated digitization of bank deposits as an alternative. In the U.S., the legislative debate over a framework for stablecoins —presented in initiatives like the so‑called GENIUS Act— faces criticism for allowing risky investments by issuers if stricter capital and liquidity requirements are not imposed; groups such as the NCRC are calling for a moratorium on national trust charter applications until comprehensive rules are in place.
The announced measures and ongoing investigations point to a greater regulatory burden for private credit managers and stablecoin issuers, with requirements for transparency, reserves and governance controls. Changes could reduce short-term profitability of certain structures, but aim to limit systemic risks and protect less sophisticated investors.
Supervisory attention will combine national reviews (GAO, ASIC) and international recommendations (FSB, ESRB, Basel Committee) intended to close regulatory gaps.
