Federal Reserve Report: There are significant liquidity risks in the financial markets, and stablecoins are still vulnerable to runs

ChainCatcher news, according to a report by the Financial Times, the Federal Reserve warns that concerns about a slowdown in economic growth in the banking sector may lead to a reduction in loan issuance, which in turn could trigger an accelerated economic decline. This is the first financial stability report released by the Federal Reserve since the collapse of four regional banks.

The report states that overall bank financing remains relatively stable, but there are significant liquidity risks in other corners of the financial market. "Overall, domestic banks have ample liquidity and limited reliance on short-term wholesale funding, but the short-term funding market still exhibits structural vulnerabilities. High-quality and tax-exempt money market funds, as well as other cash investment tools and stablecoins, remain susceptible to runs. Life insurance companies face higher liquidity risks, as the proportion of risky and illiquid assets remains elevated." (Source link)