Britain's financial system faces the possibility of further instability, with the health of insurers and hedge funds among the current areas of concern, the Bank of England warned on Tuesday. In its twice-yearly Financial Stability Report, the Bank talked not only of significant risks remaining for the banking system - in spite of the £50bn bail-out that in recent weeks has shown signs of bringing some stability - but it also highlighted other potential worries.Describing the instability in the global financial system as "the most severe in living memory", Sir John Gieve, deputy governor for financial stability, said: "With a global economic downturn under way, the financial system remains under strain."Looking beyond the banks to other risks, the report said: "One risk is that leveraged investors, like hedge funds, may be forced to liquidate asset holdings due to tight credit conditions."It added that hedge funds have recently faced "additional funding pressures due to redemption requests and a risk is that these could increase".
Britain's financial system faces the possibility of further instability, with the health of insurers and hedge funds among the current areas of concern, the Bank of England warned on Tuesday.
In its twice-yearly Financial Stability Report, the Bank talked not only of significant risks remaining for the banking system - in spite of the £50bn bail-out that in recent weeks has shown signs of bringing some stability - but it also highlighted other potential worries.
Describing the instability in the global financial system as "the most severe in living memory", Sir John Gieve, deputy governor for financial stability, said: "With a global economic downturn under way, the financial system remains under strain."
Looking beyond the banks to other risks, the report said: "One risk is that leveraged investors, like hedge funds, may be forced to liquidate asset holdings due to tight credit conditions."
It added that hedge funds have recently faced "additional funding pressures due to redemption requests and a risk is that these could increase".
Autumn's market mayhem has left the world's financial institutions nursing losses of $2.8tn, the Bank of England said today, as it called for fundamental reform of the global banking system to prevent a repeat of turmoil "arguably" unprecedented since the outbreak of the first world war.In its half-yearly health check of the City, the Bank said tougher regulation and constraints on lending would be needed as policymakers sought to learn lessons from the mistakes that have led to a systemic crisis unfolding over the past 15 months.
Autumn's market mayhem has left the world's financial institutions nursing losses of $2.8tn, the Bank of England said today, as it called for fundamental reform of the global banking system to prevent a repeat of turmoil "arguably" unprecedented since the outbreak of the first world war.
In its half-yearly health check of the City, the Bank said tougher regulation and constraints on lending would be needed as policymakers sought to learn lessons from the mistakes that have led to a systemic crisis unfolding over the past 15 months.
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